In business funding, the valley of death is a phrase used to refer to the time between the initial funding received by a startup and when it starts generating revenue. During this period, it is difficult to obtain funding because the product and business are not yet proven, but money is still being spent to develop the product, obtain any approvals needed, and market it. The name comes from the fact that this is when many startups fail.
The following are examples of ways to span the valley of death successfully.
- Accumulate money ahead of time
- Keep a source of income until you are through this period
- Consider crowdfunding
- Seek business grants and enter contests
- Obtain loans or lines of credit
- Seek funding from friends and family
- Join an incubator for startups that offers cash, resources, and/or consulting
- Barter service for service
- Form a joint venture with an organization that benefits from your product
- Commit to your major customer and offer perks such as meeting their requirements