The Bridge
Definition
There are a number of definitions of The Valley of Death (also known as the Death Valley Curve), but this is the one I use:
The phase from the start of meaningful work on the start-up, until the business has achieved sustainable cash flow.
The definition contains a couple of flexible terms, so let's start by defining them:
Meaningful Work: the founder(s) may not be full-time, but there is progress, in the form of decisions, documentation and (possibly) an embryo product.
Sustainable Cashflow: the business is able to sustain operations without further investment funds; the business is not necessarily profitable, but it may be able to borrow, trade or leverage its assets (e.g.: property, IP, customer relationships) to continue.
On a strict profitability basis, some unicorns are still in the Valley of Death, which is why I prefer a broader definition.
The focus of this newsletter will be how to cross the Valley of Death successfully, but for this first one, let's quickly review why so many start-ups fail to do so.
Main Reasons for Failure
Insufficient Funding - either no funds are available, or are not adequate to reach sustainability
Mismanagement of Funds - the founders do not allocate the funds optimally.
Misdirection of Funds - the funders mandate an inappropriate or inflexible allocation of funds.
Team Conflict - often between 'purists' and 'opportunists'.
Mistiming the Market - too late or too early for rapid take-up / strong competitive advantage.
External Costs - the burden of structural, legal or other institutional costs is disproportionate.
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Misjudging the Market - over-estimating demand or competitiveness, and not understanding customers are the most common issues.
Structural Barriers - e.g.: licencing regimes, inadequate infrastructure.
The first series of newsletters will address each of these in turn - please comment to add your thoughts on these issues, as well as to suggest additions to the list!
Thank you for having the patience to read this overview. Subsequent newsletters will take a deeper look into a more focused topic.
All the best for 2022, and watch out for my overview of what investors are looking for as we enter the New Year (I've had some fascinating conversations as I put the article together).
Yours,
Clive Wright
Public Speaker| Global B2B Conference Organizer of our flagship event | Management Consultant | Corporate Strategy | Solution Provider | Business Process Enthusiast
2 年Clive, thanks for sharing!
Communications & Strategic Interests at Telligro
3 年Clive, that is a succinct take on the big crossing. The issue with funding is also which route to take - there is no one size fits all approach, as each venture is different, Some find it easier to find funding this side of the world. Conversely, others find that they have to look further afield for funding. I am sure this will feature in your future outings. PS - like the Mike T quote ??
Investor
3 年Kevin, nice and concise.
Strategic Initiatives in SouthEastAsia
3 年B. Taek Kim good read,
I guide forward-thinking Execs to break-free from uncertainty, gain unshakable resilience and clarity, and transform to thrive—by harnessing nature and The Nomadic Mindset?. Executive Coach | Keynote Speaker | Author |
3 年Like your simple assessment - I would suggest that Teams are not really teams but Groups with individual agendas - not aligned to a real purpose with charter. Failure of not having a balance of the right mindsets - ie builder, nomadic, settler for the company at this point in time. Also seems like lack of visionary leadership and people management. Thanks again Kevin Happy 2022