It sounds as if you are keeping them far too dry, which is causing the
leaves to contract concertina fashion. All Trachycarpus species
prefer moist well-drained, but moist, cool conditions and seedlings
especially resent being too dry at the root. The roots are quite
delicate early on and without sufficient moisture they can shrivel
resulting in the death of the seedling. The ideal medium is a basic
multi-purpose compost mixed with about 10% by volume of added perlite
to provide extra porosity.

Seedlings are best transferred to small plastic pots at the 1st. leaf
stage and moved on as necessary using a similar compost. By the time
the seedlings have reached the 4th. leaf stage, they should be ready
for 0.5L pots, this time adding a loam based compost to the mix :
2parts multi-purpose, 1 part J.I. No2. Again adding 10% by volume of
perlite will ensure a well aerated mix that retains moisture and yet
is free-draining. Once established in pots, young Trachycarpus do not
need artificial heat, merely frost protection. However, a minimum
winter temperature of 5C will help them grow somewhat faster.

The first palmate (fan) leaf usually appears at the 5th. leaf stage
when the seedling is 18 - 24 months old. Development is slow for the
first few years, but speeds up rapidly once the leaf fans approach
45cms. diameter. When the young plants have 4 or 5 true leaf fans,
they are best planted out in their final positions - ideally dappled
shade or part sun in wind-sheltered sites. If the soil is moist and
humus rich, you can expect up to 30cms. of trunk growth per year on
established plants.