The Passage Across the Valley of Death: The Gap Between Research and Venture Capital

At Johns Hopkins University, I teach students of entrepreneurship. These students vary across disciplines. They include biotechnology students who are studying how to manage innovation, engineers and computer scientists who learn to write business plans, and MBA students who are learning about venture capital. The model used for this process is to begin with an innovation that can be packaged into a product or service, write a business plan, and then go seek venture capital.

This is a common approach, but the facts show that venture capitalists do not fund many ventures before they have completed product development and have proven revenue streams. Even then, only a small percentage of ventures get venture capital. How can a venture succeed, then, in transitioning from the initial product innovation to a successful growing company that has penetrated a sustainable market share? This zone of early development, between science and business, is often called the ‘Valley of Death’ because funding sources are minimal.

Ed Addison

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