Factors Affecting the Financial Sustainability of Startups During the Valley of Death: An Empirical Study in an Innovative Ecosystem

(1) Background: The survival and growth of startups in their early stages are negatively impacted by the lack of financial sustainability and scarce resources that entrepreneurs face during the first 5 years. This is known as the Valley of Death (VoD). This study seeks to identify key factors that influence the financial sustainability of startups during the VoD, which demands a significant amount of funding and government support. (2) Methods: A quantitative methodology was employed, based on a worldwide literature review that pointed out the variables of the object of study; the information collection process was conducted through a questionnaire applied to 352 entrepreneurs in an innovative ecosystem. This study empirically applies a structural equation model to determine the relationship between constructs. (3) Results: A comprehensive analysis of the results indicates that indicators such as positive sales performance, sufficient financial solvency to meet short- and long-term commitments, accurate pricing policies, and access to government and banking support are the primary factors affecting the sustainability of startups in the early stages. (4) Originality: This study provides original and relevant insights into the indicators that affect the financial sustainability of startups during the VoD and offers interesting insights for governments, institutions, and entrepreneurs to foster innovative ecosystems; it also contributes to the extant literature on early-stage entrepreneurial failures.