What is the Right Amount of Money to Raise at a Startup?

build it and they will come?

- you do need money to advertise, unless your app is really viral, and a lot of apps aren't.

- you need money to pay people that have skills that you do not, such as design, or tech, or marketing.

I'm also a die-hard boot-strapper, but your chances for success can be improved by additional people being invested in the business. The idea is to be successful by helping others succeed. For example, the $5-$15k YC provides is not the main benefit of YC.

There are three hurdles for bootstrapping (http://www.tonywright.com/2008/bootstrappers-beware/ ): covering operations (ie hosting) ramen profitability salary profitability

For a web startup, you should bootstrap or take very small investment (ie YC's $15K) to get to ramen profitability. At that point you can choose whether to grow slowly from revenues (like patio11) or seek growth capital (like DropBox did a few months ago).

With the fall in costs for build web companies, a beta is the new PowerPoint. Any credible angel or VC will want to see a product and traction before giving you money.

For me it was a question of time - raising money meant we could get up to speed faster. Sure, we could have bootstrapped, but then we'd be living on ramen for 3 years before we could afford to pay ourselves a living wage (or worse, could have gotten stuck in never-ending consulting purgatory.) Not to mention the difficulty of attracting top developers when all you have to offer is equity and the promise of riches at some indeterminate time in the future.

Anyway, for what it's worth I certainly don't regret dropping 10% in exchange for ~3 years of my life.

The argument is only relevant to startups that have funding options; there are plenty out there that would need to work hard to get funding.

However, if funding is a realistic option, and the investor isn't detrimental in some way, it's a much better deal to give up some equity and take a salary of some sort. Much like selling 100% of the equity would be too extreme, selling 0% is also over aggressive. I know a few people who are pure bootstrapping right now, and the consensus seems to be that it's a better deal (for the founders personally) to have a salary and a little less equity.

> Is taking as much as possible such a bad thing in that case?

Yes.

The right amount is "the minimum that will let you achieve your goals". That amount depends on the biz and goals but it is never "as much as possible".

In other words, the fact that certain biz require $1M to get to viability while others can get there with $10 does not imply that the former should take $100M.

Too much money, like too little money, causes problems. Does your startup need more problems?