You Need $250,000 To Start a Company

The harsh economics of startup are often easily overlooked. So let’s talk about what it really costs an entrepreneur to get a startup off the ground.

It’s about 250 grand.

Now, I know what the first response to that is going to be — because it was my own first response. Not every company needs $250,000 to get started. Hell, I can start a company for $10 right now. Dude. Hand it over and watch me.

The $250K figure actually came from someone I work with who runs a technical consultancy. She’s a wizard, and sometimes she can wield her company’s technical and operational chops at much lower rates to be able to work with startups. She does this because she’s an entrepreneur herself, and working on those kinds of ideas is rewarding and fun.

Fun rarely pays the bills, so she won’t work for free. But neither will she take all of a startup’s money. This is what she told me over coffee yesterday morning:

“I won’t take $50,000 from a startup if that’s all they have because I’ll end up building beautiful tech for them and it’ll just sit there and do nothing because they don’t have money to spend on sales, marketing, even changes to the tech when they realize they’ve built something only half of their customers are using.”