Issue #4: When to Walk Away
Continuation bias and the cost of non-compounding drift.
Many ventures do not fail. They are overextended.
Work continues, roadmaps are revised, and additional capital is allocated. Updates commonly assert the idea remains plausible, without confirming or disproving its validity.
However, a systemic shift occurs when signals that formerly guided direction and priority stop compounding.
This is not failure, but non-compounding drift. The venture continues, yet learning, traction, and strategic clarity no longer accelerate.
This state persists not from lack of discipline or intent, but due to continuation bias: the tendency to extend time and capital simply because the idea remains plausible.
Issue #4 examines when stopping is most difficult, not because the venture has failed, but because continuing is no longer justified.
Non-compounding drift:
When movement replaces progress.
In the early stages of a venture, learning compounds with each experiment and action. All contributing towards reducing uncertainty, sharpening direction and ability to make clearer decisions.
However, when this situation reverses, non-compounding drift starts to set in.
Experiments repeat common patterns.
Progress increasingly requires justification rather than genuine insight.
Decisions feel harder, not clearer.
Activity remains high while insights plateau.
Nothing is fundamentally broken, and at this point, nothing has failed.
The venture stops improving meaningfully and enters stagnation or perpetual pivots.
Why rational teams persist.
In non-compounding drift, continuation bias is the main driver of persistence.
Continuation bias is the tendency to allocate additional time and capital after signals stop compounding, simply because the idea remains plausible.
This bias does not stem from ignorance or poor intent, but from plausibility serving as a rationale to continue.
As long as an idea has not clearly failed:
Founders can justify their continued commitment.
Corporate venture teams can justify sponsorship and priority.
Investors can justify follow-on exposure.
Two phrases reliably appear at this point:
We just need more time.We just need more capital.Both statements may seem reasonable, but they frequently delay addressing the same unresolved question:
What, specifically, would need to change for continuation to be justified, and is that change actually underway?When this question is not answered, continuation becomes the default and bias replaces disciplined decision-making.
When time and capital no longer enable progress.
At the early stages, time and capital are meant to buy learning.
When signals compound:
Time increases clarity
Capital increase optionality
When non-compounding drift takes hold, their roles reverse.
Time becomes a strategic distraction as attention moves to a venture that no longer improves quickly enough to justify exclusive focus.Capital turns into commitment escalation, with funding used to preserve continuity rather than enhance competitive advantage.Nothing dramatic occurs, yet opportunity quietly narrows.
The unreported loss.
Opportunity cost rarely appears in venture updates, burn rates, or runway charts, and it does not trigger alarms.
It accumulates quietly with every additional month spent on a venture in non-compounding drift carrying a further cost:
Another idea not explored.
Another market not tested.
Another strategic option was not considered or pursued.
For founders, opportunity cost appears as a strategic distraction, with attention monopolised by a venture that no longer deserves full commitment.
For corporate venture teams, it appears as portfolio crowding, where plausible initiatives consume resources that could support more viable opportunities.
For investors, it appears as capital inertia, with follow-on funding maintaining existing positions rather than increasing expected value.
Opportunity cost becomes visible only when teams are forced to articulate what they would pursue instead.
The most significant opportunity cost is not financial, but the loss of alternative pursuits that could have been undertaken by stopping earlier.
When persistence stops creating leverage -
(A Founder’s Lens)
Founders feel this situation viscerally.
You are still working hard. Your team is still engaged. And, Nothing has failed.
However, the shift has occurred, and leverage dissipates with each pivot yielding less new information.Efforts to influence the narrative begin to rival the focus on product development. And, decisions demand more justification, not less.
What appears externally as resilience usually feels internally like unfocused effort.
Founders lose optionality not by stopping too soon, but by persisting past the point of diminishing returns.
The limit to productive pivoting.
Founders are often advised to pivot, and this is sometimes appropriate. However, the effectiveness of pivoting diminishes over time.
Initially, pivots help narrow the hypothesis space. Later, they may perpetuate ambiguity.
It is important to take into account that each pivot consumes:
Team belief,
External credibility
Strategic consistency
Learning bandwidth
Eventually, pivoting stops generating new understandings and only delays necessary decisions and the underlying drift remains.
Learning has diminishing returns.
Failure can generate insight, but only up to a point.
What is often missed is that learning becomes finite and incurs costs.
Early learning is reinforcing, but depending on tactics, it can later plateau. Often during non-compounding drift, saying “we are still learning” becomes a justification rather than an objective observation.
Continuing to learn is only rational when:
The learning still reduces meaningful uncertainty.
And the cost of extracting it is justified by what it enables next.
When these conditions are no longer met, continued learning does not justify further action and only postpones the decision it was meant to inform.
Disciplined teams prioritise stopping before extracting learning. This process is explicit and bounded, focused on generating transferable findings rather than repairing the narrative.
When exploration turns into inertia -
(A Corporate Venture’s Lens)
In corporate venturing, continuation bias often hides within governance.
Ventures persist because:
They remain sufficiently aligned with the strategy or mandate.
They have internal sponsors.
They avoid political friction.
Over time:
strategic relevance weakens
Narratives become harder to sustain
Capital is used to maintain appearances rather than to create strategic options.
“More time” becomes one more reporting cycle.“More capital” avoids a difficult internal call.The main risk is not direct loss, but the displacement of better opportunities while maintaining an illusion of progress.
In a corporate setting, an essential factor is the design of incentives and roles.
In many corporate innovation models, roles, reporting structures, and success metrics are tied to the survival of individual programs rather than portfolio outcomes. Teams are organised around specific ventures, progress is reported by initiative, and career advancement depends on sustaining ongoing projects.
In these conditions, stopping a venture is no longer only a deliberate decision. It can seem like the removal of a mandate, a team, or a career path.
Continuation becomes rational, even when signals stop compounding.
Discipline becomes less about individual resolve and more about separating continuation decisions from initiative-based incentives. This allows cessation free of personal, political, or career consequences.
When follow-on becomes default -
(An Investor’s Lens)
From an investor’s perspective, this is when discipline erodes.
The venture does not fail quickly enough to warrant termination, nor does it succeed enough to justify further investment. As a result, follow-on capital is often rationalised as:
Supporting the founder
Protecting the initial position
Preserving optionality
However, optionality is not maintained by default continuation. It is preserved by relative improvement versus alternatives.
Capital allocated to ventures in non-compounding drift is unavailable for investments with higher return potential.
This is not pessimism. It is portfolio discipline.
Discipline without performance
Discipline is sometimes mistaken for managing external perceptions.
Shutdown announcements, retrospective clarity, and lessons-learned narratives emerge later.
Real discipline is quieter. It is seen as:
Re-earning continuation, not extending it
Treating time and capital as conditional
Accepting that plausibility is not progress.
Allowing outcomes without identity defence
Legitimate decisions to cease operations are justified by evidence and process, not by external approval. Stopping does not require recognition to be valid.
Let’s execute.
A founding team, corporate venture group, or investment committee can use this diagnostic when reviewing continuation.
Answer the following questions directly and concisely.
What is the present-tense justification for continuing this venture?
Which signals have strengthened in the last 90 days, reducing uncertainty?
If no additional capital were available, what would materially change?
If this venture did not exist, what would this team focus on instead?
What decision is being deferred by asking for more time or more capital?
If these questions cannot be answered clearly, the ambiguity is a critical signal.
A closing thought.
Most ventures do not end because the case for stopping is clear.
They end because the case for continuing is never re-earned.
Walking away is not a loss of belief, resilience, or ambition. It is the result of disciplined action, applied when signals stop compounding and opportunity cost outweighs potential gains.
Stopping creates space, not for reflection or narrative repair, but for better decisions in other areas.
The work does not end when the venture stops. It begins again with greater clarity about what deserves commitment going forward.
What’s coming next? Stopping is one side of discipline. Deliberate continuation is the other. The next issue will examine actions taken once signals become clear, including:
How disciplined teams translate evidence into strategy?
How do they choose what to double down on?
and how continuation remains deliberately re-earned?
This series and perspectives draws on patterns observed across startups, corporate ventures and innovation decision-making. It is not a checklist to be blindly followed.