Silicon Valley likes to celebrate failure as a nursery school for success. That is a good thing given that failure is such a common feature of the start-up world. Some 90 per cent of start-ups fail — even in the good times. “Fail fast, fail often,” is a phrase that often passes founders’ lips.

The latest venture capital winter, which saw global funding fall 61 per cent between 2021 and 2023, has led to a fresh wave of corporate deaths. The data firm CBInsights has tracked 483 recent start-up failures and identifies several reasons for their demise: running out of cash (never a good idea), being outgunned by competitors, feuding founders and/or investors, and exhaustion and burnout. Valley mythology suggests such failures can be a “learning moment” that teaches resilient entrepreneurs to be smarter next time. “Success is a lousy teacher,” as the Microsoft co-founder Bill Gates once said. “It seduces smart people into thinking they can’t lose.”

There are, though, two flaws with this seductive theory. First, it tends to ignore the collateral damage and human cost of failure. No one celebrates the failure of a company like the fraudulent cryptocurrency exchange FTX, which saw its founder Sam Bankman-Fried go to jail, even though it was a “learning moment” of a different kind for investors. We rarely hear from those who do not have a second act. Failure can crush people’s health, wealth and relationships, wrecking lives. The last thing many failed founders want to do is to jump back on a white-knuckle, roller-coaster ride.