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DoD SBIR "Valley of Death" Runway Vaporizer.

Models how agile Silicon Valley defense startups financially bleed to death while waiting 18 months for the Pentagon to transition an R&D grant into a real production contract.

## The Pentagon's Valley of Death

The Air Force loves funding "innovative startups." They will give a drone company a Phase II SBIR grant of $1.2M to build a prototype. The startup builds an incredible drone. A 4-Star General says "This is amazing, I want to buy 5,000 of them!"

### FAQ

**Q: Why do these successful defense startups go bankrupt immediately after winning?**
A: The POM Cycle (Program Objective Memorandum). The US Military plans its budget 2 years in advance. Even if the General wants the drone today, the money to actually buy the drones won't legally be available until the fiscal budget passes Congress 18 to 24 months later. The startup must sit around for 18 months with $0 in revenue while waiting for the contract to begin. Paying 20 aerospace engineers for 18 months of 'waiting' burns millions of dollars, usually bankrupting the startup in the infamous 'Valley of Death' before the contract ever starts.