The 35-year-old, a bronze medalist at the 2014 Commonwealth Games, was choked out by Makwan Amirkhani inside a minute at the O2 Arena.
With the fight being the last of his UFC contract, it remains to be seen what his next move will be.
And he posted a lengthy and emotional message on social media to let his fans know his mindset.
"Saturday night was most definitely not my night," he wrote. "I did say he is going to have to KO me or put me to sleep to win, and he did just that.
"I felt great coming out and I felt the energy from the fans. But this is the fight game and anything can happen.
"Let's be honest, I've had no luck. I haven't had an easy fight yet, I've had no presents, and I wouldn't want it any other way.
"All I can say is I tried my absolute best, and those who know me know I put my heart and soul and live my life for this sport - not only for myself, I also coach and pass on my knowledge to the younger generation.
"I have had some nice messages of support and also some negative ones, but that is all part of being in the limelight, and I am mentally strong enough to deal with them.
"I always tell my son to not care about what other people say or think of you in this sport, because there are only a handful of people that will step in that cage like we do, and there is only a very small percentage that will step in the cage in the UFC.
"I would like to thank my team, Team Kaobon, and my coach Colin Heron as he always goes above and beyond for all his fighters.
"Win, lose or draw he is there for you from start to finish, through weight cuts, the lot, he is a true coach that stands by his fighters.
"Thank you to my sponsors who have supported me throughout, and for my wife for being such a solid woman, letting me leave my family behind while I go to train and pursue my dream and putting up with the tough times.
"Sorry to all who care for me that you all had to see me like that, but I am okay.
"What I do next, I do not know."
Grundy’s Team Kaobon team-mate Tom Aspinall, who hails from Atherton, produced a clinical display to record a first-round submission win over Russian Alexander Volkov in their headline contest.
There was a third Wigan interest, too, with 21-year-old prospect Muhammad Mokaev needing less than a minute to defeat Cody Durden with a choke hold in Saturday's opening prelim contest.
The former Deanery and St John Rigby student, who moved here from Dagestan as a young boy, is the youngest fighter on the UFC roster.