Why We Passed: 6 Deals We Regret Missing (and Why)

Every fund has missed startup deals it would like back, and ours is no exception: six deals we passed on still get discussed in partner meetings years later. These missed startup deals were not the obvious rejects; they were the close calls, the companies we turned down for reasons that looked defensible at the time and look weak in hindsight. This article is the honest version of that review. The companies are anonymised, the figures are omitted, and the point is not to wallow but to show the pattern behind each pass and how those patterns changed the way we invest across MENA.

We write this from a fund and studio perspective: we invest in early-stage companies across the region and build companies ourselves. That dual role sharpens the lesson, because the reasons we passed on external deals are the mistakes we refuse to repeat inside our studio. The six deals below cluster into six patterns: team risk overestimated, market underestimated, timing missed, process failure, valuation anchoring and thesis rigidity. Each pattern gets a deal, a diagnosis and the change it forced.

Six Missed Startup Deals We Still Think About

Before the stories, a confession: none of these six companies failed, and several became category leaders. That is what makes them instructive. A pass on a company that later struggles is a relief; a pass on a company that thrives is a tuition fee. Our review process treats every major pass the way a credit committee treats a write-off, except that the asset is the learning.

The six deals were spread across Egypt, Saudi Arabia and the UAE, in sectors from B2B software to logistics and fintech; we saw some at seed, others at the edge of our mandate. What they shared was not a sector but a circumstance: in each case, a defensible-sounding reason masked a judgement error that a sharper process would have caught. The broader context for these passes is the fast-moving market we describe in our state of GCC venture capital in 2026 report, where quality deal flow has grown faster than institutional discipline.

Missed Startup Deals: Team Risk Overestimated

Deal one was a B2B software company with a genuinely sticky product and revenue that grew without a sales team. We passed because the founding pair had never sold enterprise software, and our playbook said that sales-led businesses need sales-proven founders. The diagnosis: we overestimated team risk in a company that already had product-market fit. The product was winning customers through partners and referrals, and the founders hired sales leadership within a year. Our concern was real; our weighting of it was wrong.

The change: we now separate team risk into categories that we test independently, rather than applying a generalised founder checklist. Missing skills that can be hired are treated differently from missing judgement that cannot. That single distinction would have changed the outcome of this deal, and it now sits at the top of every investment committee memo.

Missed Startup Deals: Market Underestimated

Deal two was a logistics marketplace serving a single Gulf city, and we passed because our market-sizing model said the local opportunity was too small for a fund cheque. The company expanded from that city to three more within two years and became the reference player in its niche. The diagnosis: we modelled the market as static, extrapolating from a snapshot, when the service itself was creating the demand. It was the oldest mistake in venture: confusing the size of a market with the size of the need.

The change: market-size passes now require a second, bottom-up view built from the customer side, and we treat our own models as hypotheses rather than evidence. We also remind ourselves that in the GCC the practical market for a good company is regional, not municipal: the family offices profiled in our guide to family office startup allocation in the Gulf think in regional terms, and so should our sizing. A market that looks small from a desk in one country can look entirely different from the back office of the customer who needs it.

Missed Startup Deals: Timing and Process

Deal three was a fintech whose product ran ahead of the regulator. We passed on the grounds that licensing would take years, and the regulator moved faster than any of us modelled. The diagnosis: we treated regulatory speed as a fixed input when it is a variable the region is actively improving. Timing passes are really process passes in disguise.

Deal four is the one we are least proud of: a strong company whose diligence simply dragged. A full diary, a travelling partner, a slow data-room exchange; no one killed the deal and no one pushed it, so the founder closed with another investor on better terms. The diagnosis is process failure, plain and simple. The period after signing a term sheet taught us how fragile momentum is; this deal taught us that the momentum before it is equally fragile. A decision that nobody makes is a decision, and it is usually the wrong one.

The change: every open file now has a decision clock, and every partner meeting ends with a pass, a proceed or a timed review. A silent no is now treated as a process error, not a strategy.

Missed Startup Deals: Valuation and Rigidity

Deal five was a seed round we refused to pay up for. Our internal model said the price was high relative to revenue, so we walked, and the round closed oversubscribed within days. The diagnosis: valuation anchoring. In a region where quality at the seed stage is scarce, the price of a company is set by scarcity as much as by fundamentals, and our model was calibrated for a deeper market with more comparable deals.

Deal six was outside our stated thesis: a company in a niche we had deliberately excluded, with a revenue model we had not yet backed. We enforced the letter of the mandate and passed; the company became a category leader in that niche. The diagnosis is thesis rigidity: a thesis is a hypothesis about the world, not a law, and ours was overdue for revision. The change is that we now review the thesis itself twice a year, and any sector that produces two successive quality companies inside our network triggers a formal reassessment.

Process Changes From Missed Startup Deals

The six patterns demanded six process changes, and they now form a routine. First, a decision clock on every open file, so no deal dies from neglect. Second, a second-look review before any pass is final, with a named partner required to argue the other side. Third, a post-pass reflection at every partner meeting, capturing the learning while the context is fresh. Fourth, valuation guidance that explicitly accounts for scarcity in regional markets. Fifth, a standing review of the thesis, so the mandate cannot quietly become a cage. Sixth, writing the reason for a pass in one sentence and checking whether it survives a year of hindsight.

None of this guarantees we will stop missing deals, and honesty requires the caveat: for every pass we regretted, there were passes we were right to make, some of them on companies that later failed. The discipline of sourcing and evaluating deals like our first thirty investors taught us that the goal is not to eliminate passes; it is to make sure the pass and the proceed are both decisions, both documented, and both built on the same quality of evidence. The diligence habits that LPs expect, which we describe in our guide to what LPs ask emerging managers, apply equally to the other side of the table.

The Honest Math of Missed Startup Deals

The honest math is not about the money we did not make; we do not publish figures, and this is not a scoreboard. The honest math is about the cost of a weakly reasoned no. A pass driven by delay, bias or an unexamined rule costs more than capital; it costs the team’s confidence in the process, and confidence is what founders and co-investors track closely. Deal flow in MENA flows towards funds that decide well and decide fast, as the data gathered by Crunchbase and the deal reporting in the Financial Times and the Wall Street Journal makes plain: the region’s best companies raise from investors who show up, and showing up is a decision.

We still pass on deals, and we always will. The difference is that today’s passes are explicit, documented and reviewed, and they are challenged against the six patterns in this article before they become final. If you are a founder reading this, the practical message is simple: a fund that has studied its own missed startup deals is a fund worth pitching, because it has done the work of deciding better. If you are an investor, our advice is to write your own version of this article; the exercise is uncomfortable, and that discomfort is the point.

Use the checklist below to review your own process.

Frequently Asked Questions

Why do you still regret missed startup deals?

Because the passes were not driven by the companies. Each decision was shaped by our own bias, an outdated thesis or a process failure, and the market later showed the risk we feared was priced differently. Regret is useful when it changes behaviour.

What is the most common reason funds pass on good deals?

Team concerns and valuation anchoring. We overestimated team risk in companies that already had product-market fit, and we anchored to internal valuation models in a market where quality is scarce and priced accordingly.

How have missed startup deals changed your process?

We introduced a decision clock for open files, a second-look review before any pass and a post-pass reflection at every partner meeting. We also stopped letting a full diary be a reason to wait, because delay was our most expensive mistake.

Do you still pass on deals today?

Yes, and we always will. But the passes are now explicit, documented and reviewed rather than emergent, and we challenge them against the six patterns in this article before they become final.