Fred Wilson was the first one to clue me in to the "Valley of Death" phase. He expands on it here: http://www.avc.com/a_vc/2010/05/from-hopes-and-dreams-to-the

Fred Wilson was the first one to clue me in to the "Valley of Death" phase. He expands on it here: http://www.avc.com/a_vc/2010/05/from-hopes-and-dreams-to-the-real-thing.html http://www.avc.com/a_vc/2010/05/from-hopes-and-dreams-to-the... I also like to advise entrepreneurs to take advantage of the financing environment that is available to them during the hopes and dreams phase. It is a strange situation. Your company will be worth more to investors during the hopes and dreams phase than it will be worth while you are crossing the chasm. So you should raise enough capital at hopes and dreams valuations to get across. If you don't, a down round is waiting for you as yet another challenge while you are crossing the chasm. Companies with no revenues but big potential are worth whatever the market will bear. But once you have revenues and are heading towards earnings, the market will be able to better assess what you are worth. Revenues and earnings multiples will enter the valuation discussions. And most of the time, revenues and earnings multiples will result in a lower number than hopes and dreams, at least for a while.