How Much Money Does It Take To Start a Successful Company?
Whether you’re bootstrapping or raising capital, these are the numbers you need to hit
You can’t start a business without a lot of money. The question no one ever answers is: How much? So let’s talk about that.
I’ve founded, run, and exited a couple startups on my own with nothing but credit cards and moxie. I’ve also been a part of startups that raised tens of millions of dollars in outside investment before much larger exits. The startups that raised venture capital dollars were, in the long run, easier to navigate through the early stages, quicker to get to growth and scale, and ultimately had more prosperous outcomes for everyone involved. But I wouldn’t recommend it for everyone.
Despite conventional wisdom, outside investment isn’t a panacea for the entrepreneur. It’s fraught with risk, pressure, and often impossible expectations. But here’s the thing. Bootstrapping is also a proposition that comes with risk, pressure, and often impossible expectations, it just comes from a different source.
If you don’t have a cash hoard as fuel for growth, you’re going to wind up spending the cash equivalent in time, resources, and other forms of capital to get to the same place.
Before I drop numbers on you, let me make a qualifier absolutely clear. The numbers I’m using aren’t based on science or hard data. This is an experiential exercise rolled up into figures that are understandable, so you can get a sense of how much cash, equity, time, called-in-favors, and, well, moxie, you’re going to have to ultimately spend.
So please understand I’m not saying it takes exactly $X to get to a Y outcome. I’m saying it takes the equivalent of X cash spend to get to a Y outcome that isn’t just a plateau, but a step up to the next level on the ladder to exit.
It takes about $10,000 to get an idea into a proper executable state
Go ahead, tell me it doesn’t. On some level I’ll agree with you. But then I’ll go back to all the times I spent less than $10,000 to get an idea off the ground and all the times I spent more than $10,000 to get an idea off the ground, and I’ll…