The “valley of death” is a common term in the startup world,
referring to the difficulty of covering the negative cash flow in the
early stages of a startup, before their new product or service is
bringing in revenue from real customers. Martin Zwilling often get asked about the
real alternatives to bridge this valley, and there are some good ones.According to a Gompers and Lerner study, the challenge is very real, with 90% of new ventures that don’t attract investors failing within the first three years. The problem is that professional investors (Angels and Venture Capital) want a proven business model before they invest, ready to scale, rather than the more risky research and development efforts. The first advice , Martin Zwilling in this article in Forbes, provides for new entrepreneurs is to pick a domain that doesn’t have the sky-high up-front development costs, like online web sites and smart phone apps.
- Accumulate some resources before you start.
- Keep your day job until revenue starts to flow.
- Solicit funds from friends and family.
- Use crowd funding.
- Apply for contests and business grants.
- Get a loan or line-of-credit.
- Join a startup incubator.
- Barter your services for their services.
- Joint venture with distributor or beneficiary.
- Commit to a major customer.
Forbes
