February 21


10 Ways for Startups to Survive the Valley of Death

Financing your way through the entrepreneurial valley of death takes commitment, determination, and problem solving of any new startup, and thus is the sift that separates the true entrepreneur from a hobbyist. While it’s a deep financial valley with vague hopes of angel investors at the other side, here are 10 ways to help you get through it.

  1. Accumulate some resources before you start: Reduce your risk by planning your business first. Create estimates that will get you to the revenue stage, and save up to help cover costs before you head into startup land.
  1. Keep your day job until revenue starts to flow: A common alternative is to work on your startup on nights and weekends, surviving the valley of death with another job (or a spouse’s income). This often takes longer and has the added risk of bringing both jobs down. A good plan is needed for this to work.
  1. Solicit funds from friends and family: Early stage startups commonly use funding from friends or family.  Often, an outside investor will want to know that you have an equal amount at stake.
  1. Use crowd funding: A new trend in startup funding is the use of online sites to request ‘pre-order’ donations which will lead into benefits for the funders down the line. This method’s level of success is based on the excitement your product generates but is very effective.
  1. Apply for contests and business grants: Due to government initiatives focused on R&D, alternative energy and other technologies this is an increasing source of focus. While you don’t give up any equity, they must be applied for early and are very competitive.
  1. Get a loan or line of credit: If you have personal assets that you are willing to commit as collateral this is an option that doesn’t have initial equity.
  1. Join a startup incubator: Startup incubators are companies, universities, or other organizations which provide resources such as office space, consulting, and investments to nurture fledgling businesses.
  1. Barter your services for their services: An example of this would be getting free office space for service. It is a viable possibility with many industries (legal, accountants, engineers, etc.)
  1. Joint venture with distributor or beneficiary: A company (related or interested) may fund an advance very early, which will lead to partnership and repayment when you develop a proper revenue stream.
  1. Commit to a major customer: You may locate a customer who would be willing to fund your project in exchange for a product that is more specifically tailored to meet their needs.

Read the full article from Martinz Willing.


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