How much money do you really need to start your company?

I've never been one to seek funding, and I probably will never seek funding for any project that I start in the future. I built my current business with $1200 initially in 2009, and I've made over $100,000 in the past 2 years being the only founder and employee. You truly can build a business with no outside funding and without $XXX,XXX if you know where and where not to spend it. I've seen startups who get their first round of XXX,XXX and they think it's wise to blow $50-75k on an explanation video or $100k on adwords to try and get as many people as possible to their service as fast as possible. Truth is, these things take time to grow, and throwing large sums of money at it won't make it the next big thing overnight.

I also have another take on this -- those who want XXX,XXX in funding and say they will be killing it RIGHT NOW if they had the money don't even have what it takes to really get deep in there and grind it out -- putting in years of work and development. You can't just throw money at everything and it will become the next big thing -- Color is a prime example of that.

I'm a fan of bootstrapping, but it's not always an option. Plenty of opportunities in consumer require a critical mass before you can start making money. These are the kinds of plays that make sense when VC is flowing more freely. For some businesses, it really does take 10 developers plus 5 others working for a year to hammer things out. That clocks in at $2-3 million, which just so happens to be a reasonable Series A.

We are exactly in this situation right now. We have used our own money so far and it will soon be depleted. But we haven't found a good MVP yet. Now the question is to know whether we should raise money from friends or go back to work on part-time jobs to keep the ball rolling. It really is a tough choice.

I honestly find it hard to believe that people are actively looking for a specific investment but don't know what they would do with the money if they got it. It sounds like they want to be a startup groupie and raising funds is their entry ticket.

I wholeheartedly agree, having bootstrapped myself, but can't stress enough the importance of having the right team members on from the start. When pay is minimal and launch stress is high, one sour grape can easily spoil the bunch.

Finding what customers will pay for is the single most important skill in any business. Having worked full time out of school for 12 years on my own has taught me how to create value for customers in a lasting way. I can only get better and better at it every day. It's the single most important skill I can have and work on, and translate to a product of my own -- find how an idea will work as a business.

Bootstrapping has a short runway based on our own pockets. VC funded runways are often more controlled by outsiders.

If you can bootstrap to breaking even, you can let it sit and grow for a longer time even if you return to other work, in a way that VC backed startups wouldn't linger.

Sometimes great ideas need to let the market / demand needs to grow. Like buying property before area area starts to re-develop. If you have a business that's selling already, it will help get better and higher amounts investment should you want to go that route.

Imho, VC's want to be water to an already sprouted and growing plant.

Great link, thanks for sharing 0.02

Well put! I've just embarked on a bootstrapped startup myself with the aim to get out an MVP as soon as possible. We have a good small founding team and with the age of free/almost free tools and resources, there's no reason we couldn't bootstrap until we get the MVP into the hands of customers...

This is great advice for a certain subset of companies, mostly consumer-based (either directly or indirectly) web startups.

If you were starting a more technology intensive company, you could very well need to raise a ton of money to start building a basic prototype.

I wish authors would qualify their bold statements.