We all know that building a startup is pretty much investing. I would love to say that it’s not all about money, but we all know money plays a huge part of it.
That’s why it’s astounding the sheer number of people I’ve encountered that are looking for developers to build first versions, without really knowing how much everything costs. These founders may have great ideas that might never get out there and benefit the world because they were lacking in preparation.
So today I’m going to give you a rough estimate and a little extra information on the cost of financing each stage of your startup.
|Focus:||Build a social media presence. Get your idea out there, see if there’s interest.|
|Advice:||For $100-$200 per year, you can build as many websites as you want with Wix, Strikingly, or any other type of landing page tool. You can build one website in less than an hour.|
|Budget to raise:||$1K|
|Financed by:||Own pocket|
|Focus:||Build a first version of your solution out of existing tools. Evaluate your market and get your first customers. You would use $2K-$3K for rea building process, and the rest is to assess the market and see what they need.|
|Advice:||Get someone who can connect tools (like WordPress, Google Forms, e-commerce websites, getting payments in Typeform, etc.,) more than a developer.Think strategically. Building an audience is a good focus. Give people a glimpse of what you will be able to achieve with your own software.|
|Budget to raise:||$10K|
|Financed by:||Own pocket or very close family|
|Focus:||Develop and build a real product with custom viable/scalable software. In this stage, you will start getting paid and build up funds for the next stage.|
|Advice:||Don’t hire right away, especially if you don’t need a provider 24/7 yet. If in doubt, check out my other post, Freelancer or employee: What does your startup really need?.|
|Budget to raise:||$40K-$100K|
|Financed by:||Love money, 3Fs (family, friends and fools) people that believe in you and what you do, but don’t need much proof. Also grants or loans, innovation loans with insurance, etc.|
|Focus:||Improve the product by integrating more elaborate and relevant technologies into the next versions of the app.|
|Advice:||A CTO should be hired once you’ve raised the seed money. By now, you should be able to afford 10 employees to keep the operation running smoothly.|
|Budget to raise:||$200K-$600K|
|Financed by:||Previous stage earnings, angel investors, local investors, people from your network willing to invest in startups, and you.|
From then on, you have…
|Series A||Budget to raise: $1M-$3M VC (venture capital)|
|Series B||Starts at $10M|
|Series C||Starts at $100M|
My consulting services and content focus primarily on early startup growth since these stages have proven to be the most difficult to overcome, and where founders make the most mistakes in.
If you’re interested in reading up about post-seed investments, this article on Investopedia explains these stages in depth. If you are an early-stage startup, you can check out my other posts on this and courses on startup tech management, or you can even schedule a mentoring session with me.