This Is Not How Angel Investing Was Supposed to Work
It was supposed to be simple.
Angels back ambitious founders. Founders grow, raise, and exit. The returns recycle into the next generation of startups.
At least, that was the unwritten social contract of early-stage investing. Capital. Optimism. Legacy.
Read through the end, and I will provide a concrete solution to change direction.
Over the past five years, the loop has been broken. Exits have stalled, and bridge rounds have become the rule, not the exception. What was once about fueling innovation now feels like a struggle for survival.
One angel I talked to put it bluntly:
"This is not how angel investing is supposed to work anymore. All the cash that angels allocate to startup investments is tied up in existing investments. Meanwhile, VCs are facing a similar crisis: startups that should've graduated to venture investment need bridge rounds from their existing angel investors."
He is right. The numbers back him. Across Europe, exits fell sharply after 2021. Dealroom data indicates that European startup exits declined by approximately 42% from 2021 to 2024. PitchBook and Carta both report that the gap between priced rounds now averages about two years. Recent 2025 data confirms it: nearly 28% of all venture deals are now bridge or extension rounds, capital looping back into old bets rather than seeding new ones.
Deep-seated fatigue is often the underlying issue, and financial concerns are just a symptom. We've all been there, more times than we'd like to admit: The investor update that starts with 'raising a short bridge' drains belief. The zombie company that refuses to grow or die absorbs more time, money, and mental energy than the combined efforts of the following ten fresh ideas.
It's no surprise that 85% of founders now report elevated stress and nearly half rate their mental health as poor. Fatigue is measurable and contagious.
While the market still looks busy, everyone talks about resilience and patience. But under the surface, portfolios are frozen. Capital moves, but progress does not. Three out of four VC-backed startups fail to return capital, and less than 30% of attempted turnarounds succeed. The odds are known and bad.
When founders say, "We need more funding," what they often mean is, "We do not know what else to do" because they are not getting the help they need.
That's where most decisions go wrong. Waiting is comfortable. It feels supportive, and looks responsible. But it delays the inevitable. We need a new approach, a new way of thinking.
Not long ago, I sat in an investor call that started, again, with the words 'just a short bridge.' The hard questions weren't asked early, primarily out of comfort. Over time, it turned into absolute contempt and distrust from both sides. The company's now stuck, no trust, no movement, no way forward.
What to do about it?
Before the next bridge, run a thorough audit on the soft KPIs and root causes that often hinder business, not just check financial and pipeline metrics.
Measure and quantify questions like:
Does the leadership team have crisis management competence?
How strong and consistent is shareholder trust in management's ability to lead through uncertainty?
Does the leadership have the energy to pull the business out of this crisis?
How many unplanned funding rounds have happened in the past 24 months?
What is the management team's experience as CEO/GM?
I put the most telling 11 questions into an Early Warning and Bridge Round scorecard. If you're interested, please DM me before the next "quick bridge" lands in your inbox.
This is precisely why I developed the Turnaround Readiness and Recovery Odds Index. It's a tool that helps you assess the likelihood of a successful turnaround. It takes twenty minutes. It measures what investors and boards rarely quantify: leadership alignment, decision discipline, focus, and operational will, as well as financials and strategies.
It identifies where recovery is possible and where it is not, saving money, time, and reputation.
The goal is simple. Decide early to increase your recovery odds and release what cannot.
Investors lose more from delayed decisions than anything else. The Recovery Odds Index exists to end that loop. To replace hope with evidence, and to provide investors, boards, and management with a straightforward way to distinguish between real recovery and slow decline.
If you hold a business or portfolio that feels frozen, run it through the Recovery Odds Index. This can be a struggling tech startup, a traditional manufacturing company facing market shifts, or a service-based business dealing with changing consumer behaviors.
That is how you restart the loop that made angel investing work in the first place. This loop, which involved backing ambitious founders, supporting their growth, and recycling returns into new startups, was the essence of early-stage investing.