Team project courses in software engineering allow students to apply their acquired disciplinary knowledge while developing essential skills needed to work in the software industry. This paper examines the challenges and lessons learned by students in two team project courses involving industrial customers. The first course involves small teams and less complex project, whereas the second course, has larger teams and more complex projects. Using thematic analysis, we analyzed 158 reports submitted by two cohorts of students across two successive team project courses. As per our findings most challenges and lessons learned pertain to soft skills, such as teamwork, working in remote and hybrid setting, and collaboration with industrial customers. The results show that challenges and lessons learned evolve as students progress to the second team project course, for example, managing changes and addressing individual skill gaps were more pronounced in the first project course, while students reported greater coordination, communication, and contribution issues in the second team project course. The alignment between the challenges faced and the lessons learned suggests that addressing challenges in teamwork, collaborating with industrial customers, and working in hybrid or remote settings helped students develop effective strategies to mitigate these challenges. This process offers a valuable learning experience for the students, enriching their professional growth.