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How to avoid the "Startup Valley of Death"​ in Seed Funding?

38% of startups tend to fail due to a lack of early-stage funding. The "startup valley of death" describes a supply gap in the venture capital market.

VCs have moved into the early stage of business building while startups seeking seed funding still depend on angel investors and family offices.

Startup Financing Cycle Seed Funding

Lowering business risk for investors is vital. Some angel investors use angel syndicates like A2D Ventures for pre-vetted deals to potentially lower risk.

The way to raise funds is by raising money not based on a "vision" or an "Idea" but based on proven measurable business metrics. Founders must prepare and collect robust data for angel investors to show that the business model is well-proven and consolidating.

What type of data is required, entirely depends on the business you are running. If you are running a B2C business & and product, your main metric might be the number of signups or orders per month.

If it's a B2B product, the most important metrics will most likely be Life lifetime value (LTV) and Customer Acquisition Cost (CAC), so how much money you will earn over the lifetime of a customer, and how much it costs you to acquire such a customer.

  1. Do not raise funds too early

  2. Get closer to your product-market-fit

  3. Generate repeatable growth

Collect relevant metrics to prove your business model to investors. This gives startups a better chance of receiving seed funding in the valley of death as their business would now have clearer roots.

*The information contained in this article is provided for informational purposes only, and should not be construed as legal advice on any subject matter.


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