About $250K is needed for a company get to sustainability

This is a silly and myopic article. That sounds harsh but I can't think of a nicer description. Moreover, the author himself describes doing it for far less ($10k). I don't mean to be a curmudgeon here, but IMO, I think articles like this hurt more than help. Tossing out a not low but semi-attainable number is just clickbait.

In reality the amount of money varies by many orders of magnitude. It can be as low as $1k (your basic legal costs and some cheap hosting) to as high as $100mil (you need facilities, manufacturing, warehousing, retail channels, etc, etc). Each business is different and how much you will need to "get to sustainability" will vary based on the market niche, strategy, competition, positioning, market landscape, timing, regulatory burdens, etc, etc.

Hell, even for something fairly well defined business concept like "start a bar in a medium-sized midwestern US city" the costs can vary by an order of magnitude depending on the specifics.

Better advice: research your market and plan out what you think you'll need. Estimate the various expenses that lead to revenues, including the time-delays between when you spend and when you receive funds. Then do it again for a less-than-rosy scenario. Finally accept that your guesstimate is probably wrong and go for it anyway!

I feel like this is focused on companies that are designed to scale quickly and eventually get huge. There are a wide array of companies that don't want to scale that quickly (e.g. lifestyle businesses, like a service business). OP basically said it's what's necessary to get to series A funding, but if you don't particularly care about getting venture capital, then that figure is irrelevant.

I think a better title would be "$250k is needed to get to series A funding", since that's basically what the article it about, and many (most?) startups will never seek funding outside bank loans and whatnot.

The price has gone down it seems. A few years ago I'd estimated it at a million, but acknowledged that technology could be a multiplier. So maybe a quarter million isn't that far off my estimate. But $250K adjusted for individual wizardry does lay bare just how daunting that climb is.

Information technology is wizardry, but it's the upstart in a land where finance has basically been Sauron for hundreds of years. Engineers believe they can beat finance by working smarter, by learning more powerful spells and correspondences. It fails more often than not.

When it does work, watching successful startups slowly sell their soul to the devil by incorporating finance strategies is a bit of a hobby of mine. Invariably they take their competitive advantage, the goodwill they've built up with their customers / workers, and commoditize it, making it as close to a negotiable financial instrument as possible.

Uber drivers are no longer people, they are financial resources with dollar values. Uber sold them the vision of a life bounded only by your ambition to enable it to reach for the brass ring, then clawed it back once it had it out of sheer, pure greed.

People who freely gave their time and attention to make Facebook something more interesting and mainstream than existing social networks which at the time seemed to be trending inexorably towards ever more niche audiences found that time and attention farmed, commoditized, and sold.

Watching new money slowly morph into old money, the moral adventures of the new demigods, as well as the public's unholy fascination with them, better than any Marvel movie could possibly be. Better, because I can participate in the morality play just by opening up my phone and calling an Uber.

These truly are interesting times.

This is definitely a low-end estimate. To build a good product takes a team of four senior people (2 back-end, 1 front-end, 1 UX) 6-12 months including the iteration and modifications. Let's say the average salary for a senior person is $120k / year + health insurance and benefits, office, etc. We're already at $240k for 6 months or $480k for 12 months NOT INCLUDING health insurance and benefits.

Don't tell me that a dev shop can do it much faster/cheaper. I've worked with a few of the TOP dev shops out there and you always get more bang for your buck with FTE who have a vested interest in what you are building.

We haven't even discussed sales and marketing yet.

This is just the cost of shipping something that works, not the cost of getting to Product/Market Fit.

All-in I would say getting to Product/Market Fit can be anywhere from $1M - $6M for SOFTWARE depending on the complexity of the new market.

It depends on the type of company.

For software, 250k won't get you much in terms of engineering resources on either of the US coasts: maybe 2 people for a year, plus cloud costs and overhead... maybe.

If you're outsourcing everything, possibly this could work... Though probably not if it's your first try: you really need to know how to manage your outside folks to avoid getting fleeced.

Then once you build the product, you have to market and sell it. The resources and time required is often underestimated.

I'm not convinced.

You need two piles of money to start a business (and let’s look generally outside the box of a tech startup):

1: the money needed for initial purchase of equipment, licensing, real estate, etc.

2: three-years worth of operating expenses.

I have experience starting a brewery and two Montessori schools, and Number 2 is definitely the hard one.

I have a tiny marketplace start up in the EV space and a family member wants to invest $60k. I don't need the money BUT i am at a point where i need to build v2 and add more features to make more sales with different offers. After reading this article i am not sure if it applies to my situation. I don't know if the family member's $60k investment will be enough and not sure what his expectations are in terms of ROI and if i should just wait and ask for $250k to build v2. I have a friend who can build it at a reduced rate. Kinda confused on what direction to take. The comments are very useful.

It depends entirely on the founding team the product you're trying to achieve, but $250K seems about right. I started a SaaS company last year and have grown it to a mid six-figure run rate. Even though it worked out, it wasn't the right way to do it. If I could go back in time and pick a dollar amount of raised day one, it's probably $350K.

Startup outcomes are fairly binary, so just raise the money you need to operate correctly as soon as you can.

I don’t think this number is reasonable if you are going for a tech solution, especially if you trying to build something fairly complex. Less then a half of what strong SWE is paid in Silicon Valley... or almost total of one who works in a wrong place, or waits for stocks.

That is why startups can’t afford strong engineers, unless they want to invest their time for a chance.

With that amount of money, I can live 100 years. Housing, insurance, food, every basic need covered (and I ll own my house for goods, no loan).

Why the hell would I start a company ?

YC invests about 120k at a minimum, doesn't it?

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