Startup Purgatory: Why Most Companies Get Stuck Between Launch and Scale
In traditional theology, purgatory is a temporary state of purification which is a holding place for souls who are
In traditional theology, purgatory is a temporary state of purification which is a holding place for souls who are ultimately destined for heaven but not quite ready yet. In the startup world, a similar concept exists, though far less divine: Startup Purgatory. It’s the frustrating in-between stage where a company has launched but hasn’t yet figured out how to grow. Revenue might be trickling in, customers are showing interest, but the momentum isn’t there. The startup isn’t failing, but it’s not succeeding either. It’s stuck in limbo, uncertain whether it’s climbing towards scale or slowly stalling out.
Here’s the thing that’ll make your skin crawl: only 1 in 200 startups actually become proper scaleups. That’s not a typo. Most companies aren’t dramatically imploding in Silicon Valley fashion… they’re just… existing. Treading water. Making enough progress to keep the lights on but not enough to break through.
If you’re reading this and feeling a bit sick to your stomach, you might already be trapped in Startup Purgatory.
The Mirage of Early Success
The cruellest trick Startup Purgatory plays is making you think you’ve made it. You’ve got users signing up, maybe some decent press coverage, perhaps even a bit of revenue coming through the door. Your mates are congratulating you, your mum’s telling the neighbours, and you’re starting to believe your own hype.
But here’s what nobody tells you: early validation can be a complete red herring.
Take the classic scenario: you launch your app and get 1,000 downloads in the first week. Brilliant, right? Except six months later, you’ve got 5,000 downloads but your monthly active users have plateaued at 200. People are trying your product once and buggering off. You’ve confused interest with engagement, curiosity with commitment.
The worst part? This fake momentum makes you double down on the wrong things. You start hiring, spending on marketing, maybe even looking for office space. You’re scaling based on vanity metrics whilst the real problems (retention, product-market fit, sustainable growth) are quietly festering underneath.
It’s like building a house on quicksand and wondering why the walls keep cracking.
When Revenue Becomes a Cruel Joke
Perhaps the most torturous aspect of Startup Purgatory is having just enough revenue to keep you hopeful but not nearly enough to feel secure. You’re making money, but it’s unpredictable, unsystematic, and frankly, unsustainable.
Your sales process, if you can call it that, involves you personally ringing up prospects, giving bespoke demos, and practically begging people to buy. Each deal feels like a minor miracle rather than a predictable outcome. You close $10K one month, then $2K the next, then nothing for six weeks.
This isn’t a business… it’s a very expensive hobby with occasional windfalls.
The problem is that revenue without repeatability creates the dangerous illusion that you’re onto something. You tell yourself you just need to “scale what’s working,” but there’s nothing systematic to scale. Your customer acquisition is held together with duct tape and desperation.
Real businesses have engines. You’ve got a rusty bicycle that sometimes makes it up hills.
The Series A Bermuda Triangle
Let’s talk about the funding nightmare that keeps founders awake at night. You’ve burnt through your seed money, proven there’s something worth pursuing, but you’re not quite ready for the big leagues. Welcome to what academics have formally dubbed “the valley of death” – a reflection of the vast number of companies that are unable to raise the needed capital to progress to the next stage.
The valley of death reflects the perceived imbalance of risk and reward for an investment at this stage, as well as the resulting difficulty for companies in raising capital during this critical transition. For high-tech startups, it is precisely the phases between R&D and sales that prove fatal. Your metrics are decent but not spectacular. Your team is capable but not complete. Your market opportunity is real but not obviously massive. The technical risks inherent in taking your product to market are high, a significant amount of capital is needed to finance development, and the time horizon of investment stretches 6-8 years into an uncertain future.
Meanwhile, your runway is getting shorter by the month. You find yourself pitching to 50, 100, sometimes 200 investors instead of the 20 you expected. Each rejection chips away at your confidence and your bank balance.
The particularly vicious aspect of this trap is timing. The longer you spend fundraising, the worse your metrics look. Investors can smell desperation, and desperation doesn’t exactly scream “hot investment opportunity.”
Some founders get so spooked by this process that they start making increasingly desperate compromises: taking money from the wrong investors, accepting terrible terms, or pivoting based on whatever the last VC said rather than what their customers actually need.
The Founder’s Identity Crisis
Here’s something they don’t teach you at startup weekend: success can be just as disorienting as failure, perhaps more so.
You started this company because you had a vision, a problem you were desperate to solve, maybe even a personal mission. But somewhere between launch and scale, that clarity gets muddied. You’re no longer sure if you’re building the right product for the right people, or if you’re the right person to build it.
The skills that got you to launch (hustle, creativity, doing everything yourself) become liabilities at scale. You need systems, processes, delegation, strategic thinking. But letting go feels like losing control of your baby.
Meanwhile, your team is looking to you for direction whilst you’re quietly questioning everything. Should you pivot? Double down? Hire executives? Bootstrap longer? The options are overwhelming, and each choice feels irreversible.
This identity crisis isn’t just personal… it infects the entire company. When the founder doesn’t know where they’re going, neither does anyone else.
The Comfortable Hell of “Good Enough”
Perhaps the most insidious aspect of Startup Purgatory is how tolerable it becomes. You’re not hemorrhaging money. Your customers aren’t actively complaining. Your team isn’t revolting. Everything is… fine.
And “fine” is the most dangerous word in the startup dictionary.
Fine means you’re not in enough pain to force radical change. Fine means you can keep doing what you’re doing indefinitely. Fine is the enemy of great, but it’s also the enemy of learning what actually works.
Companies in Startup Purgatory often develop an addiction to incremental improvements. They’ll spend months optimising their website conversion rate from 2.1% to 2.3%, or debating whether the call-to-action button should be orange or blue. These activities feel productive but avoid the fundamental question: are we building something people actually want enough to pay for, repeatedly, without us having to convince them?
The comfortable hell of Startup Purgatory is that it provides just enough positive reinforcement to prevent the painful self-reflection required for real breakthrough.
The Mass Market Reality Check
Here’s a harsh truth: getting your first 100 customers is completely different from getting your next 10,000. Your early adopters (bless them) are forgiving, adventurous, and willing to work around your product’s rough edges. They might even enjoy feeling like they’ve discovered something before everyone else.
But the mass market? They’re ruthless. They want products that work perfectly, immediately, without any learning curve or technical hiccups. They don’t care about your startup journey or how hard you’ve worked. They want value, now, or they’ll find it elsewhere.
The transition from early adopters to mainstream customers isn’t just about scaling—it’s about complete reinvention. Your messaging, your product, your support systems, even your company culture might need to change dramatically.
Many startups in Startup Purgatory are actually successful with their niche but terrified to make the changes necessary for mass appeal. They’re worried about alienating their early supporters or losing what made them special in the first place.
Escaping the Purgatory
So how do you break free? The answer is usually uncomfortable and always requires admitting that something you believed about your business is wrong.
Sometimes it means acknowledging that your product isn’t as good as you thought and needs fundamental changes. Sometimes it means realising your market is too small and you need to think bigger. Sometimes it means accepting that you need help… whether that’s hiring experienced executives, finding advisors, or bringing in partners with complementary skills.
The companies that escape purgatory are usually those willing to have brutally honest conversations about what’s actually working versus what they hoped would work. They stop optimising around vanity metrics and start obsessing over the numbers that predict long-term success: retention, lifetime value, organic growth, customer satisfaction.
Most importantly, they stop being comfortable with “good enough.”
Because in the end, Startup Purgatory isn’t a way station between failure and success. For most companies, it becomes the final destination. The question isn’t whether you can survive Startup Purgatory… it’s whether you’re brave enough to leave it behind.
The exit door is always there. It just requires admitting that where you are isn’t where you need to be.
And that admission, painful as it is, might be the most important step your company ever takes.
