

Ask HN: In seed funding for startups, is $20,000 a lot? - donohoe

I was wondering how far $20,000 will get a startup. I know it varies by situation. As "Y Combinator" About page says:<p><i>Seed funding is the earliest stage of venture funding. It pays your expenses while you're getting started.</i><p><i>Some companies may need no more than seed funding. Others will go through several rounds. There is no right answer; how much funding you need depends on the kind of company you start."<p></i>We make small investments (rarely more than $20,000) in return for small stakes in the companies we fund (usually 2-10%).*<p>Assuming a startup takes $20,00 from one source only, where would the money go, what kind of expenses, how long does it typically last?<p>(To clarify: I realize a 100 companies would use that 100 different ways)
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byoung2
The idea is that you (and 1-2 other founders) should be able to live frugally
on that money for 3-6 months without having to work a day job. That gives you
$3333 per month to use for food, shelter, and misc expenses.

I've seen 2bd apartments on Craigslist in the San Jose area for under $1500. 3
guys should be able to eat for $1000/mo. Add another $500 for utilities, and
the rest ($333) for business expenses (hosting, Elance, etc).

Ideally, that would be enough for you iron out your idea and to get a
prototype working. At least that's how i picture it working out.

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donohoe
I guess I'm coming form the perspective of someone who has a family to support
(rent, bills, daycare etc - the fun stuff!)

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brk
The YC investments are primarily intended to cover the 2 R's (Rent and Ramen)
for a small founding team to take a working prototype to a thought-out
demonstrable working v1.0 (or V0.9) kind of release.

Some portion of the proceeds may also be spent of server resources,
development machines, google ads, logo designs, or whatever. Technically, like
any funding, the founders can spend it almost anything, but they are expected
to make progress toward a launchable product.

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donohoe
That helps - I could also see this as a big help to those who still have the
day-job and need to push things further - would that be typical too, or at
this stage have people fully comitted?

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byoung2
I think YC looks for at least 1 person who can commit full-time to the
startup. If you're working for the man, that's at least 10 hours a day M-F
that you're not working on your startup. That's 220 hours a month that you
could be putting in work on building your product, reaching out to bloggers,
pitching investors, etc.

