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Posted: Mon 10th Aug 2026
15 min read
When Sebastian Mallaby's 375-page history of venture capital, The Power Law, failed to include the word "failure" in its index, Bernie Bulkin knew someone needed to tell the other side of the story.
"He starts by assuming we'll make investments, and every now and then we'll get this 100x return," says Bernie, whose new book, Why Start-ups Fail, draws on decades of experience spanning both corporate leadership and venture investment.
"In other words, he says we don't have to worry about the failures."
But Bernie does worry about them, not just because of the money lost, but because of the entrepreneurs who devote years of their lives to ventures that collapse.
"Many of these failures are avoidable if you can learn from other experiences," he insists. "You won't know by avoiding failure that you're going to get the next Meta or Google, but you might get some very good, viable companies that return three or four times the original investment. That's a win for everybody."
It's a perspective earned through an extraordinary career. As former chief scientist of BP and later chair of the UK Office of Renewable Energy (2010-2013), Bernie has witnessed innovation from every angle, from laboratory breakthroughs to billion-pound strategic decisions.
His journey from academic (holding professorships at institutions including Cambridge University and City University of New York) to corporate strategist to government adviser has given him a unique vantage point on why some technologies thrive commercially while others, despite their brilliance, fail to find markets.
Honoured as an Officer of the Order of the British Empire (OBE) in 2017 for his services to the energy industry, Bernie brings a physicist's precision to the messy world of start-up investment. His PhD in Physical Chemistry from Purdue University and postdoctoral fellowship at ETH Zurich taught him how to test hypotheses rigorously, a discipline he now applies to business models with the same rigour most investors reserve for balance sheets.
According to research analysed by Bernie, most start-up failures stem from six core problems, and crucially, most are predictable.
Technology that doesn't work tops the list, though not in the way founders expect.
He explains:
"Many tech products go to market as a proof of concept that may or may not be scalable."
The gap between a working prototype and an enterprise-ready product has killed countless promising ventures, a lesson he learnt repeatedly during his years overseeing BP's research portfolio, where laboratory success rarely translated directly to commercial viability.
Market forces come second, though Bernie admits he'd rank this first.
"Even if the product is good, will anyone buy it?" he asks. His advice is blunt: "Don't just say, 'This is a £100 billion market, and we only need to get 1% of it.' Try to obtain an understanding of who you have to convince."
Bernie reserves particular caution for start-ups targeting large corporations with innovative products. The automotive industry provides the perfect cautionary tale, one he's observed from both sides of the negotiating table.
"You might get interesting feedback from Mercedes or Volkswagen, but they don't buy from start-ups," he warns. "They buy from their suppliers. You need to figure out who the real customer is."
This mistake, according to Bernie, costs founders years of wasted effort.
A start-up might develop groundbreaking sensor technology for vehicles and spend months cultivating relationships with automotive giants, only to discover that Mercedes doesn't procure directly from innovators. Instead, they work exclusively with established tier-one suppliers like Bosch or Continental.
"These large corporations have procurement departments with strict vendor requirements," Bernie explains, drawing on his experience navigating BP's complex supplier networks.
"They want suppliers with proven track records, established quality systems, and the capacity to deliver at scale. A start-up with brilliant technology but no manufacturing infrastructure simply doesn't fit their risk profile."
His years in the energy sector taught him this lesson repeatedly:
"At BP, we constantly encountered brilliant technologies from university spin-outs or small companies.
"But integrating them into our operations required working through established contractors and service companies who understood our systems, had the safety certifications, and could deliver at the scale we needed."
The solution, he says, is understanding the supply chain hierarchy.
As research from Global Venturing shows, this is where the "venture client" model becomes crucial. BMW, for instance, pioneered an approach where it became an early customer of start-up technology by mandating that its established suppliers adopt innovative solutions.
"The trick is finding which tier-one supplier would benefit most from your technology," Bernie advises. "They're the ones with both the purchasing power and the incentive to innovate. They need to stay competitive with other suppliers, and your technology might give them that edge."
This approach has broader implications. According to Elpis Labs, companies like Maersk learnt this lesson by moving their venture teams directly into strategy functions, asking three critical questions: Is this tied to our strategic priority? Will it create a meaningful impact? Is the business ready to adopt it?
For start-ups, this means mapping the decision-making chain before making a single sales call. Who actually signs the purchase orders? Who influences those decisions? And critically, who has the budget and authority to bring in external innovation?
On the opposite end of the spectrum, Bernie highlights an equally valuable but often overlooked strategy for consumer-facing start-ups – corporate partnership channels.
"British Gas might have regulatory pressures or things they want to sell to their customers, and you might have a gadget suitable for their retail customers," he observes. "You could never reach those customers alone."
This insight challenges the conventional wisdom that consumer products require massive marketing budgets and direct-to-consumer campaigns. Instead, Bernie advocates for what might be called "borrowed audiences", leveraging the existing customer bases of large corporations.
The economics are compelling. British Gas serves millions of UK households. They have existing relationships, billing systems, customer service infrastructure, and, crucially, trust.
A start-up with a smart home energy device could spend years and millions building brand awareness, acquiring customers one by one through digital advertising, and establishing credibility. Or they could partner with British Gas.
"These large companies often have regulatory requirements to meet," Bernie explains, drawing on his tenure as chair of the UK Office of Renewable Energy, where he saw firsthand how policy mandates create corporate opportunities.
"Energy companies need to help customers reduce consumption. Banks need to support financial literacy. Telecoms providers must expand digital inclusion. Your product might solve their problem while reaching millions of potential customers instantly."
During his government role, Bernie observed how renewable energy deployment targets created urgent needs for energy companies to find innovative solutions.
He explains:
"They weren't just looking for good technology; they were looking for technology that helped them meet specific regulatory requirements and customer expectations.
"A start-up with the right solution at the right time could suddenly become strategically valuable."
The arrangement creates what economists call a "positive sum game". The corporate partner gets a solution that helps them meet targets, enhances their customer offering, and potentially generates new revenue streams.
The start-up gets distribution that would otherwise take years and millions to build.
Retailers like Tesco have partnered with start-ups to enhance their offerings. Telecommunications companies work with app developers. Insurance providers team with health tech innovators.
In each case, the start-up trades some margin or exclusivity for exponential reach.
"The key is understanding what the corporate partner needs," Bernie emphasises. "It's not just about your brilliant product, it's about solving their strategic problem.
"Do they need to modernise their image? Attract younger customers? Meet sustainability targets? If your solution addresses their pain point, suddenly you're not just another vendor. You're a strategic partner."
According to Forbes, this approach requires detective work: "Digging through organisational charts, research on LinkedIn, reading press releases" to understand who makes decisions and what problems keep them awake at night. But the payoff can be transformative.
The remaining four failure points, leadership transitions, board composition, funding strategy, and general business competencies, often prove fatal as companies scale.
"Transitioning from founder to leader is a major shift," Bernie notes. "Investment follows confident leadership more than any other factor."
One particularly expensive mistake Bernie has witnessed repeatedly: the engineering department that grows out of control.
He recalls evaluating a company with "32 engineers and one salesperson, and the salesperson wasn't very good. The fact that they aren't making sales isn't surprising.
"While you have these engineers, you also have a big sales job to do," he explains. "You don't want to sell something before you're ready, but you must test things, and that requires sales and marketing."
This imbalance reflects a deeper issue: founders who don't understand what skills they lack.
Bernie distinguishes between skills, "things like understanding basic finance", and competencies, "things like knowing how to build a team. They are very different."
His academic background gives him particular insight here. "When I was Dean of Arts and Sciences at the Polytechnic Institute of New York, I saw brilliant researchers struggle with team management. Technical excellence doesn't automatically translate to leadership ability. The same is true for founders."
For micro-entrepreneurs and small businesses, Bernie sees particular value in business networks like we have at Enterprise Nation.
"Networks of all sorts are important," he says. "They can be important in terms of giving you a competitive advantage if they can't be easily replicated."
The value of networks extends beyond simple connection-making. As research shows, the best corporate-start-up relationships emerge from structured programmes that map business challenges before scouting solutions.
When the European Union introduced new compliance regulations, Maersk's consulting team identified client struggles first, then entered the market with clear problem definitions to find matching start-ups.
Bernie's own career exemplifies the power of cross-sector networks.
"Each of these roles gave me different perspectives on the same problems," he reflects. "The academic understands the science. The corporate executive understands operational constraints. The government adviser understands policy levers. Put them together, and you understand the system."
One piece of conventional wisdom Bernie challenges is the cult of the serial entrepreneur, including figures like Elon Musk.
"Everybody would like to back someone who has already been successful because they figure they will do it again," he acknowledges. "Sometimes it works, and sometimes it doesn't."
The real value of experienced founders isn't their track record, it's their hard-won knowledge.
"People who have taken a company from nothing to a big company have learnt where the difficulties occur and how to get out of those problems. They've learnt that now and then you're going to be three months from bankruptcy, and you don't panic," he explains.
But he warns against being dazzled: "Don't be so overwhelmed by their star power that you ignore what they are actually pitching."
Some venture guys will say, 'Show me something that is a thousand times better than anything today; we don't want incremental improvements.' Well, sometimes those little incremental improvements can have big societal and business impacts, Bernie notes.
He advocates for what he calls "realistic ambition", having a roadmap to profitability, even if it changes:
"Getting that discipline, knowing that if we get the cost of these parts down, we make money; if we don't, we never get there, is a very important discipline."
His service on the Editorial Advisory Board of Energy and Environmental Science at the Royal Society of Chemistry has reinforced this view:
"I've seen groundbreaking papers on laboratory breakthroughs that were 10 times better than existing technology. Five years later, the incremental improvement, maybe only 20% better, is the one that's actually in the market, because it could be manufactured at scale and integrated into existing systems."
Know your real customer
First, understand who the customers are and how you're going to reach them. If you're doing something for the automotive industry, don't assume you'll sell to BMW.
Find out who actually makes the buying decisions; often, it's their tier-one suppliers, not the car manufacturers themselves.
Acknowledge your knowledge gaps
Be realistic about what you know about running a business, what you don't know and how you're going to learn.
This isn't a weakness; it's strategic thinking. I've chaired boards where the founder's willingness to admit gaps made them more investible, not less.
Build your team around your weaknesses
What are you good at, and what are you not good at? How are you going to find people to help you with the things you aren't good at?
Maybe your investors can help you find them. Technical brilliance is valuable, but it's not sufficient.
Find trusted advisers
Find a coach that you can trust. Bounce problems off them. This is where networks become incredibly valuable; they give you access to experienced people who've solved the problems you're facing. Don't try to figure everything out alone.
Balance engineering and sales
You need to appreciate the quantity, quality, and variety of engineering you will need to get from the lab to scale. But don't build a fortress of engineers while neglecting the sales team.
Develop a roadmap to profitability
Start by saying, 'Is this a business that will eventually be able to make money?' You need to have a roadmap, even if it's wrong, to know what you need to do to hit your milestones.
Investors want to see that you've thought through the economics, not just the technology.
Don't chase the moonshot if incremental works
Don't be persuaded that you have to show something completely crazy to build a successful business. Sometimes those little incremental improvements can have big societal and business impacts, and they're often more investible than the moon shots.
The energy transition wasn't built on revolutionary breakthroughs alone; it was built on hundreds of incremental improvements that added up.
Consider partnership over mass marketing
For consumer products, ask yourself: could a large company with an existing customer base benefit from offering this? British Gas, major retailers, they all have strategic needs that your product might address. That's potentially millions of customers you couldn't reach otherwise.
Understanding their regulatory pressures and strategic objectives is just as important as perfecting your product.
Bernie Bulkin's book, Why Start-ups Fail: Avoiding the traps on the path to commercial success, is published by Bloomsbury Business. His analysis challenges the Silicon Valley mythology that celebrates risk-taking over risk-management and offers a pragmatic alternative for founders who want to build sustainable, profitable businesses.
