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

(1) Background: The survival and growth of startups in their early stages is 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. This study seeks to identify key factors that influence the financial sustainability of start-ups during the Valley of Death, 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 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 start-ups in the early stages. (4) Originality: This study provides original and relevant insights into the indicators that affect the financial sustainability of start-ups during the Valley of Death 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.