Valley of Death refers to the strong risk situation for startups to fail after the initial stages. It was popularized by Prof. Andrews Hargadon – a management expert and educator, while exploring the life cycle of startups.
The valley of death refers to financial risks that start-ups face as they struggle to grow from small teams to going ventures. The dip of the valley refers to the debt—the negative balance sheets—that companies experience as they invest money now in hopes of making it back upon success (the accompanying figure provides a general description).
According to Hargadon, startups goes through a ‘valley of death’ where there can occur financial nightmare for the endeavor featured by debt, financial risks and negative balance sheets. Companies who makes sizable investment in developing innovative technology and products tend to suffer the consequences of this “Valley of Death.”
