Why So Many Startups Never Reach Their Second Funding Round
Seed funding often gives a company more opportunities to fail, not succeed.
Opinions expressed by Entrepreneur contributors are their own.
The "valley of death." I hear this term used a lot in startup circles, representing the gap between a great idea and the task of turning it into a business. From a financial standpoint, it points to the moment when the feel-good times funded by an initial seed investment come to an abrupt end after a search for formal venture capital fails.
Josh Lerner, Harvard Business School's venture capital guru, estimates that 90 percent of new businesses can't bridge this gap and end up shutting down because of it. That's a frightening stat, and it begs an explanation.
Continue reading this article — and all of our other premium content with Entrepreneur+
For just $5, you can get unlimited access to all Entrepreneur’s premium content. You’ll find:
- Digestible insight on how to be a better entrepreneur and leader
- Lessons for starting and growing a business from our expert network of CEOs and founders
- Meaningful content to help you make sharper decisions
- Business and life hacks to help you stay ahead of the curve