
How much money do you really need to start your company? - TWSS
http://blog.kveton.com/2011/09/23/how-much-money-do-you-really-need-to-start-your-company/
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massarog
I've never been one to seek funding, and I probably will never seek funding
for any project that I start in the future. I built my current business with
$1200 initially in 2009, and I've made over $100,000 in the past 2 years being
the only founder and employee. You truly can build a business with no outside
funding and without $XXX,XXX if you know where and where not to spend it. I've
seen startups who get their first round of XXX,XXX and they think it's wise to
blow $50-75k on an explanation video or $100k on adwords to try and get as
many people as possible to their service as fast as possible. Truth is, these
things take time to grow, and throwing large sums of money at it won't make it
the next big thing overnight.

I also have another take on this -- those who want XXX,XXX in funding and say
they will be killing it RIGHT NOW if they had the money don't even have what
it takes to really get deep in there and grind it out -- putting in years of
work and development. You can't just throw money at everything and it will
become the next big thing -- Color is a prime example of that.

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sarbogast
Certainly not. But on the other hand, without those 41 million dollars, they
would not have been able to spend six months developing a brand new product
(that looks much more interesting than the first one) without generating a
cent of revenue in the meantime. Years of work and development have an
opportunity cost, and with more money, you can buy some execution time and be
there on time.

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epall
I'm a fan of bootstrapping, but it's not always an option. Plenty of
opportunities in consumer require a critical mass before you can start making
money. These are the kinds of plays that make sense when VC is flowing more
freely. For some businesses, it really does take 10 developers plus 5 others
working for a year to hammer things out. That clocks in at $2-3 million, which
just so happens to be a reasonable Series A.

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dasil003
This is absolutely true, different businesses have orders of magnitude capital
requirements to get off the ground. However the big change in the last decade
is how many more scalable businesses are possible to get off the ground with
very little capital. If you want to take a shot at something big, more power
to you, but if you're a first-time entrepreneur personally I'd recommend
bootstrapping. That practical knowledge of how to find product-market fit,
even on a small scale, is infinitely more valuable than all the big-time
planning you can dream up.

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sarbogast
We are exactly in this situation right now. We have used our own money so far
and it will soon be depleted. But we haven't found a good MVP yet. Now the
question is to know whether we should raise money from friends or go back to
work on part-time jobs to keep the ball rolling. It really is a tough choice.

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petervandijck
How do you mean you haven't found a good MVP yet? (Just trying to parse that.)

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ghc
In entrepreneurial circles, MVP commonly stands for Minimum Viable Product.
This is the smallest set of features your product needs to be viable as a
business.

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petervandijck
Yes, but it's not something you find, it's something you build. Which is why I
asked. It looks like he meant "we haven't found market fit yet".

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sarbogast
Indeed you are right. That is what I meant. And building a product that
reaches market fit takes some time and quite a few iterations.

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biot
I honestly find it hard to believe that people are actively looking for a
specific investment but don't know what they would do with the money if they
got it. It sounds like they want to be a startup groupie and raising funds is
their entry ticket.

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markgarity
I wholeheartedly agree, having bootstrapped myself, but can't stress enough
the importance of having the right team members on from the start. When pay is
minimal and launch stress is high, one sour grape can easily spoil the bunch.

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j45
Finding what customers will pay for is the single most important skill in any
business. Having worked full time out of school for 12 years on my own has
taught me how to create value for customers in a lasting way. I can only get
better and better at it every day. It's the single most important skill I can
have and work on, and translate to a product of my own -- find how an idea
will work as a business.

Bootstrapping has a short runway based on our own pockets. VC funded runways
are often more controlled by outsiders.

If you can bootstrap to breaking even, you can let it sit and grow for a
longer time even if you return to other work, in a way that VC backed startups
wouldn't linger.

Sometimes great ideas need to let the market / demand needs to grow. Like
buying property before area area starts to re-develop. If you have a business
that's selling already, it will help get better and higher amounts investment
should you want to go that route.

Imho, VC's want to be water to an already sprouted and growing plant.

Great link, thanks for sharing 0.02

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fourmii
Well put! I've just embarked on a bootstrapped startup myself with the aim to
get out an MVP as soon as possible. We have a good small founding team and
with the age of free/almost free tools and resources, there's no reason we
couldn't bootstrap until we get the MVP into the hands of customers...

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tryitnow
This is great advice for a certain subset of companies, mostly consumer-based
(either directly or indirectly) web startups.

If you were starting a more technology intensive company, you could very well
need to raise a ton of money to start building a basic prototype.

I wish authors would qualify their bold statements.

