Why don't failing startups just throw in the towel?

There are so many startup companies that are on life support or actively failing where the founders just refuse to throw in the towel, shut the company down, and return at least some of the money to investors. The preferred approach seems to be to continue limping along, take more money, do more layoffs, pivot the focus of the company again, all to continue the charade that this is just a bump in the road and this time the nth vision of the company with x team under y leadership will surely succeed!

It seems like the only reason these companies shut down is when everyone finally turns them away from securing more funding and the founders post a sad LinkedIn message about how today was the last day of operations at Beepboopbop. As a founder, wouldn’t your reputation be left more intact by being proactive about an unavoidable outcome? Going to the investors and outlining that some of the assumptions you made were wrong, the growth never happened despite all that you did, and this one didn’t turn out the way you thought?

I think doing this is looked at as “giving up” in the VC world however, and you you will be written off as not being “obsessed” enough about the problem, or you that you just didn’t have what it took and you’re not the next Steve Jobs.

Why does this happen? Isn’t the entire goal of a small company with a goal to become a business just to do that as quickly as possible? Most of the time the answer will be no, but that’s not necessarily a failure if you got to that understanding quickly and without wasting an enormous amount of money which seems like is the opposite of what’s happening now where the company is literally forced to shut down after wasting as much money and time as possible.