A version of an opinion I've been forming over the last two years of writing cheques into UK scale-ups: the bulk of pre-seed and seed-stage company failure is a distribution failure, not a product failure.
The product is fine. The team is fine. The market is real. What kills the company is that it can't, at any cost it can sustain, acquire customers fast enough to outrun the runway.
This is the risk hardest to assess from a pitch deck and the risk I now spend the most time trying to test for in first calls.
The product-risk default
Most pre-seed investing conversations default to product risk. Is the product good. Is the technology defensible. Is the team capable of building it.
These are necessary questions. At the early stages, the answers determine whether the company can exist at all. But I've come to believe they're the easier questions, and the answers — if you've done due diligence — usually come out positive. Most companies that get to the point of pitching at seed have figured out the product. The product works. Customers, where they exist, like it.
What I increasingly find myself sceptical about isn't whether the product can be built or improved. It's whether anyone will buy it in volume.
The reason I weight this is because, in the deals I've watched fail, the failure pattern is overwhelmingly distribution. The product was fine. The team built it. They got it to market. They couldn't acquire customers profitably at scale. The runway ran out before the unit economics worked.
What "distribution risk" actually means at pre-seed
Distribution risk isn't about whether the founder has heard of marketing. Most have. It's about whether the founder has a specific, defensible, testable hypothesis about how customers in this market are acquired, and whether that hypothesis has any signal yet.
Three questions I now ask in first calls.
What is the primary acquisition channel for the company at scale? Not "we'll do content, paid, partnerships, outbound". Pick one. Why is it the right one for this product, this market, this stage?
The strongest answer is specific and grounded in some observation about how customers actually find solutions in this space. "We've talked to 40 prospective customers. 70% of them found their last vendor in this category through industry-specific Slack communities. We're going to build community presence as the primary motion." That's an answer. It's testable. It might be wrong, but the founder has done the thinking.
The weak answer is generic and built around what the founder has heard works. "We'll do content marketing because content is good for SEO." OK. So will every other company in this category. That's not a strategy.
What's your evidence the primary channel can carry the company at the size you need it to? Some channels work for small revenue and break at scale. Some don't work at all without a brand to amplify them. Some require a budget the company doesn't have.
The strongest founders have an answer here too. "We've run $10k of paid against the ICP. CAC is $400. LTV at our pricing is $4,800. The math works at the size we need." That's evidence. The number might be wrong, the channel might saturate, but the founder has tested.
The weak answer is "we haven't tested it yet but we believe it will work". Sometimes that's defensible — pre-product, pre-revenue companies don't always have data. But the absence of any data should at least be acknowledged, with a plan for getting some quickly.
What's your distribution insight? Equivalent to the insight slide on the deck. What do you understand about how customers in this market are acquired that other people don't?
This is the question that separates founders who've worked the problem from founders who've theorised about it. The strong answer is non-obvious. The weak answer is repetition of what every other founder in the category is also doing.
Why this is harder to assess than product risk
Product risk is concrete. There's a thing. You can look at it. You can talk to customers using it. You can examine whether it works.
Distribution risk is theoretical at pre-seed. You're being asked to assess whether a motion that hasn't been run at scale yet will work at scale. The data points are limited. The team's confidence is high (it has to be — they're raising). The investor's tooling for testing the claim is weak.
Most investors compensate by under-weighting the question. They focus on product, market, team, and deal terms — all of which are more tractable — and treat distribution as a problem to be solved post-investment.
That treatment is exactly what causes the failure pattern. The company gets the money, builds the product, can't acquire customers, runs out of runway, dies. The investor's diligence didn't fail at "did the product get built". It failed at "could the company sell it".
How I try to test for it
A few habits I've developed over the last two years.
I ask for the customer interview log. Not the polished case studies. The notes from the conversations the founder had with prospective customers before they wrote any code. Founders who've done this work have a notebook. Founders who haven't, don't. The notebook tells me a lot about whether the company has been built around real customer pain or around founder intuition.
I ask the founder to talk me through the most recent failed customer conversation. Why didn't this prospect buy. What was the gap. What's the founder doing about it. The answer reveals whether the founder is engaging with the actual market or believing their own narrative.
I ask about the worst metric in the GTM funnel. Every funnel has one. If the founder can't tell me which metric is currently underperforming and why, the founder isn't running a GTM motion — they're running on hope. The founders who can articulate "our problem is mid-funnel — we get the meeting, we don't close it, here's why and here's what we're doing about it" are the founders worth backing.
I weight customer references above team references. Most decks come with team references — investors, advisors, ex-managers. I want to talk to customers, including ones who didn't buy. The conversations with customers tell me more than the conversations with cheerleaders.
What this means for founders raising
If you're raising at pre-seed and you've focused your deck on product and team (rather than the GTM and distribution work that operator angels weigh most heavily) — which most decks are — you're being assessed on the dimensions that aren't actually what's going to kill your company.
Build the GTM section out. Show me the customer interviews you've done. Show me the channel test data, even if it's small and ugly. Show me you've engaged with the question of how customers in this market are actually acquired and that you have a specific, testable hypothesis about how to do it cheaply and repeatably.
The investors who matter — the ones who've watched companies die — are weighing this question more heavily than the deck conventions of three years ago suggested. The founders who've done the work on it raise more easily and at better terms.
The product matters. The team matters. The market matters. They all matter less than the question of whether the company can sell what it's building. That's where I'd spend the time if I were on the founder side of the table.