How Much Money Does It Take To Be A TechCrunch50 Finalist?

The money primarily goes to salaries. The more VC money a startup has, the more temptation there is to hire a team of "seasoned" VPs of ... something, at the tune of $150K+ per employee per year.

It's all about perspective. When it's just you or you + one other, you can easily start thinking, "Man, I could do so much with only $200,000." But you really couldn't - you just think you could. Oh sure, you could spend it all on marketing and/or R&D to drive interest/adoption. But if you do blow it all on those and you are successful, you and your co-founder will no longer be able to handle it all; you'll need an inside sales person, an outside sales person, HY, bookkeeping, legal help, operational help, etc. And now you need more money. And raising more money takes time. After all, you just got $200,000 - "Why do you need more so soon?"

Don't get stuck in that mindset; plan for success and spec out your hires before you get there. You'll quickly find that you'll be able to spend more than you thought you could once you start writing your business plan.