Expertise and Mentorship Help Startups Exit the ‘Valley of Death’

Transitioning to a scale-up is proving difficult for startups within Canada’s tech ecosystem. There are many questions about how to better support startups in order to maintain competitiveness and longevity. The transition can be so difficult that Patrick Horgan, VP, Manufacturing, Development & Operations at IBM Canada refers to it as the ‘Valley of Death’.

What the ‘Valley of Death’ Means

The phrase is widely used in innovation circles to describe the gap between a promising early company and a self-sustaining business. In the early days, a startup can often get by on grants, small investments from friends, angels or accelerators, and the founders’ own savings. Later, once it has strong revenue, larger investors and banks are happy to fund its growth. The valley is the stretch in between, when the company needs far more money and expertise than it did at the start but can’t yet show the results that later-stage investors want.

Plenty of companies with good products fail in that gap. They run out of cash while hiring a sales team, struggle to move from a handful of early customers to hundreds, or find that systems which worked for ten employees break at fifty.

Scaling up is also where a different set of skills starts to matter. Building a product and finding the first customers rewards speed and improvisation. Growing a company rewards repeatable processes, reliable technology and managers who have done it before. That’s why mentorship from people with that experience is so often named as the missing piece.

Building Bridges Over the Valley

Bridges are being built over the Valley, though. Initiatives like IBM’s Bluemix Garage – which provides technology support, shares growth experience, and offers mentorship – aims to foster scale up success in the long-run.

Bluemix was IBM’s cloud platform for building and running apps. It launched in public beta in February 2014 and was based on the open source Cloud Foundry project, according to Wikipedia. The Garage added people to that technology, pairing the platform with the hands-on support and mentorship that companies at the scale-up stage often lack.

What Happened Next

The Bluemix name was retired. In October 2017, IBM announced it would rebrand its cloud as IBM Cloud, merging its components and retiring the Bluemix and SoftLayer brands, according to the same Wikipedia entry.

IBM still runs a program under the Garage name. Today it describes IBM Garage as an engagement model that combines enterprise design thinking, agile development and DevSecOps practices, now accelerated by generative AI tools from IBM and its partners. The focus has moved toward helping large organizations change how they work, rather than toward startups specifically.

The problem Horgan described hasn’t gone away in Canada. In its review of 2025, the Canadian Venture Capital and Private Equity Association reported that investment at the Series A through D stages, the rounds that typically pay for scaling up, stayed below 2024 levels, while pre-seed and seed investment held roughly steady. It recorded 29 venture-backed exits and no IPOs that year. “In Canada, that shows up as slower progression from company formation to scale and liquidity, even when quarterly figures improve,” said David Kornacki, the CVCA’s director of data and product.

In other words, Canada keeps starting companies at a healthy pace, but the valley between starting and scaling is still where many of them stall.

What It Means for Founders

The support that helps most at the scale-up stage is usually experience rather than technology alone. Founders approaching that point should look for mentors who have grown a company through the same stage, and for partners who can help with the parts that tend to break first: sales, hiring, finance and the systems that hold the business together.

It also helps to plan for the valley before reaching it. That means knowing roughly how much money the next stage of growth will take, what results larger investors will expect to see, and how long the current funding will last if things take longer than hoped.