The ‘Valley of Death’ is a term that has been thrown around the startup and venture ecosystem for a long time, referencing the period from inception to product market fit, during which a startup has to rely largely on money from investment to survive.
Although there are numerous definitions for this period online, it is actually very difficult to find anything that describes its deeper significance in the startup ecosystem, and more importantly, its varied impact on a startup’s chances of success based on a founder’s access to capital.
The US census reports that 50% of the population in the US will be minorities by 2024, and that over 50% of the current US population is female.
However, despite this clear, even distribution of demographics across the US, according to Fortune, less than 3% of investment dollars go to female founders. Equally as shockingly, another article reports that less than 23% of venture-backed founders are ethnically diverse.
With less access to venture capital, minority and female-owned businesses are less likely to have sufficient capital to fuel traction, and therefore are significantly less likely to make it. The length of the Valley of Death and a company’s resulting chance of survival is almost entirely dictated by speed to product market fit. Investment buys time to achieve this.
Considering an already high failure rate in new companies, women and minority entrepreneurs are on an uneven playing field from the outset.
At TVC, it is our goal to invest in highly defensible, mission driven companies solving the world’s biggest problems with a strong preference for teams that prioritize diversity, equity, and inclusion from the get-go. We believe this is the clearest investment and impact opportunity of the coming decades with our own team representing that intent in action.
The path to product market fit may be an inevitable rollercoaster, but as more than just financiers, we are committed to helping founders move with conviction and remove obstacles, including fundraising, on their way to establishing healthy, long-term businesses