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CMA Final · Entrepreneurship and Startup · The Entrepreneurial Ecosystem

In the language of startup funding, the 'valley of death' most commonly refers to which phase?

The valley of death is the phase after early seed money has been spent but before the venture generates enough revenue or secures further funding, so cash is negative and survival is at risk. It is not about post-IPO price falls or liquidation.

  1. AThe period after an IPO when share prices fall below the issue price
  2. BThe stage after the initial seed money is spent but before the venture earns enough revenue or raises further capitalCorrect
  3. CThe period when a startup is being wound up under insolvency law
  4. DThe gap between incorporation and obtaining a PAN

Explanation

The valley of death is the cash-negative stretch where early capital has been consumed on development but the product has not yet generated sustainable revenue or attracted the next round. The IPO price-fall option describes post-listing weakness, not this phase.

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