Vibe Coding is creating startups that aren’t ready for investment
Startups Magazine Startups Editorial
Founders can now build a demo in days, but the company behind it may be a mess. That gap can spook investors even when the product looks ready.
Based on reporting by Startups Magazine, Startups Editorial — read the original for the full story.
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Vibe coding has changed the pace of startup building. With tools like Cursor, Lovable, Replit and Claude, founders can now move from an idea to something real enough to show investors in days or weeks, not months. That sounds efficient. It is. But eAccounts says the speed is also hiding a more awkward truth: a product can look investable long before the company itself is ready for money.
The risk is not usually the demo. It is the paperwork, the ownership trail and the basic plumbing of the business. Who owns the IP? Were founder shares issued properly? Was vesting ever put in place? Does the cap table match Companies House filings, or was it knocked together informally and left to rot? According to eAccounts, those are the issues that can destroy investor confidence, even when the software itself is solid.
Kris Corbisiero, eAccounts’ founder, says one of the biggest mistakes is incorporating too late. If IP is built before the company exists, it belongs to the founder personally, not the business. That can be fixed with an assignment into the company, but only if it is handled early and correctly. And if the founder simply swaps that IP for shares, there is a tax problem waiting too: SEIS and EIS shares must be paid up in full in cash.
The same pattern shows up in other places. Founder shares with no vesting can leave an early leaver holding too much equity for too little contribution. Mixed personal and business spending can leave a founder with records that are basically useless in a fundraising round. And if contractors built the MVP, copyright may still sit with them unless there was a written assignment at the time.
Then there is R&D tax relief, which has its own hard stop. First-time claimants have to notify HMRC within six months of the end of the accounting period, and if they miss that window, the claim is gone. Corbisiero’s point is blunt: AI has made it easier to build fast, but not easier to justify every claim that comes with building. Investors may forgive a rough product. They are much less fond of a toxic cap table.
My take — AI-written commentary, not fact-checked reporting
The new startup flex is a working product, not a working company, and that is a very expensive confusion. Europe loves paperwork when it is annoying and hates it when it becomes necessary; fundraising is where the bill arrives. AI may have sped up building, but it also sped up the part where founders discover they have been playing business on hard mode.
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