How sustainable aviation startups can navigate the three Valleys of Death
Learn why climate tech startups fail, and how to avoid It.
There's no shortage of ambition or ideas in climate tech. No shortage of capital deployment either, at least at the aggregate level.
Yet the failure rate remains staggering. Companies with promising technology, strong technical teams, and successful pilot demonstrations consistently fail to reach commercial scale.
Why is that? That question became the focus of our final chapter in Sustainability in the Air: Volume Two, a synthesis drawn from two years of interviews, podcasts, and startup case studies.
What emerged from the research was a pattern deeper than conventional wisdom suggests:
The “Valley of Death” is commonly known as the period when a startup has come out of the lab and is working to commercialise, but is burning cash with no revenue coming in.
Except there isn't one "valley of death" in climate aviation. There are three distinct funding and operational chasms, each with unique characteristics.
The three Valleys of Death
Lab → Pilot: This initial chasm emerges when $1-2M in early research funding confronts $5-10M in demonstration costs. Academic breakthroughs rarely translate directly to real-world applications, and many promising technologies stall at this phase due to under-capitalisation. The failure rate here, according to BCG, can be as high as 90%.
Pilot → Commercial: The second occurs when companies with successful pilot demonstrations attempt to scale to their first commercial installation.
Universal Hydrogen's collapse despite successful flight trials exemplifies this challenge. It had raised close to $100 million, but it couldn't make that next big jump to production, which would have required 8-10x in funds.Market entry → Scale: The third and perhaps most treacherous valley emerges when companies with early commercial traction attempt to scale. Even well-capitalised ventures struggle to secure the funds needed for broad market entry. Fulcrum BioEnergy's bankruptcy despite United Airlines' backing and Northvolt's financial challenges despite $13B in funding demonstrate the magnitude of this challenge.
In aviation, these valleys are exceptionally deep due to sector-specific constraints:
Hardware development cycles, measured in years, not months.
Certification requirements that cannot be circumvented or accelerated.
Capital intensity that exceeds typical venture funding parameters.
Risk profiles that often fall outside traditional investment mandates.
What Sets the Winners Apart
In the concluding chapter of Volume Two, we synthesised quantitative and qualitative data to identify the critical success factors enabling companies to navigate these valleys successfully. Our research identified 10 strategic principles that consistently differentiate successful climate aviation ventures from those that fail.
Here are some examples:
Economic value proposition, not environmental virtue
While mission-driven founders often emphasise sustainability metrics, the market consistently rewards companies that lead with economic value propositions. In aviation's capital-intensive ecosystem, environmental benefits must be accompanied by compelling unit economics.
Electra, featured in the book, exemplifies this principle. Their hybrid-electric eSTOL aircraft don't merely reduce emissions; they fundamentally transform the economics of regional air mobility.
By enabling operations from ultra-short runways, they unlock routes between thousands of underserved locations without requiring new infrastructure. This creates new market opportunities rather than offering a greener alternative to existing flights.
As Patrick Gruber, CEO of Gevo, also featured in the book, puts it bluntly: "Sustainable aviation fuel is all BS if it can't compete economically with oil."
This stark assessment reflects the reality that mission-driven companies must build solutions that work in the real world of market economics, not just in an idealised green future.
Discrete problems, targeted solutions
Climate change presents an overwhelming challenge when viewed holistically, but the most successful companies focus on solving specific, well-defined problems within the larger system.
As Zachary Bogue, deep tech investor at DCVC, framed it when we interviewed him for the chapter on e-Fuels company Twelve:
"I view climate change as an enormous pile of dirty laundry. It is a collection of discrete problems." He continued with the metaphor, "Each individual article of clothing is a discrete problem in the climate. The problems only get smaller if people pick up and address each individual piece of clothing."
This approach has proven effective for companies that target specific problems rather than attempting to solve aviation's emissions challenge in its entirety.
By focusing on a discrete segment with clear unit economics and adoption pathways, they've attracted funding and gained market traction where more ambitious but diffuse efforts have faltered.
Strategic partnerships as risk mitigators
Technical innovation alone rarely secures the capital required to cross all three valleys. The most successful companies recognise the value of partnerships from day one, understanding that external validation is often more persuasive than technical brilliance.
Heart Aerospace's founders, Anders and Klara Forslund, exemplify this principle. When preparing for Y Combinator's Demo Day, they faced a crucial challenge: how to convince seasoned investors to back their electric aircraft startup with just two minutes on stage.
"We didn't have anything in terms of technology," Anders recalled. "How could we show traction? How could we show that we were the people who could do this?"
Their solution? Rather than emphasising their technical vision, they secured letters of interest from three Scandinavian airlines before pitching. This approach transformed their presentation from a theoretical concept to a market-validated opportunity with real customer interest.
Today, they are one of the few sustainable aviation companies to have broken through the $100 million funding barrier.
Implementation framework
We'll share additional principles in subsequent analyses. However, the complete framework, encompassing all ten strategic differentiation factors, is available in our newly released book, Sustainability in the Air: Volume Two.
These principles have implications beyond startups. They provide a strategic roadmap for corporates, investors, and policymakers navigating aviation's sustainability transition. Rather than simply highlighting success stories, we've examined what's working in climate aviation and why conventional approaches continue to fall short.
We'll be discussing these findings and signing books at aviation sustainability events throughout the year. Follow us on LinkedIn for updates, or grab your copy of Volume Two now.