On the "Valley of Death" of Venture Capital Finance
Many innovation projects are abandoned before the idea is developed into a marketable product. This failure is sometimes called the "valley of death" and is most pronounced for technology-based entrepreneurial ventures, since the disadvantage of being small and new weighs all the more in the case of financing innovation. Due to the complex nature of most innovation projects, screening and monitoring is very costly and requires expensive expert knowledge, while entrepreneurs may be particularly reluctant to disclose information out of concern of imitation.