Angel Investors - How Much Money Does a Startup Need to Launch or Grow? - Use of Funds - Ren Carlton

I was messaging a friend of mine earlier this week about launching a new business. When I asked her how much money she thought we needed she said:

"We can each invest a max of $500 each, as partners, and make a prototype, then we can both apply for further business grants or angel investors."

A bit shocked by her response, I turned to the internet for further guidance. When I googled "how much money does a startup need", this was the first result: 

"Estimate your costs. According to the U.S. Small Business Administration, most microbusinesses cost around $3,000, while most home-based franchises cost $2,000 to $5,000 to start."

How Much Money Does a Startup Need?

Most technology startups, raising outside funding is a necessary step in the process of building a viable business. Not every business needs to be a technology company, but most of the businesses we see have some component of technology.

Most companies that reach a Series A round of funding Raise between $25,000 - $500,000.

That is a pretty wide range. Let's take a deeper look.

Common Startup Costs

Here are some common startup costs they may have:

-Office space

-Equipment and supplies

-Communications

-Utilities

-Licenses and permits

-Insurance

-Lawyer and accountant

-Inventory

-Employee salaries

-Advertising and marketing

-Market research

-Printed marketing materials

-Making a website

Make sure to add any other expenses that are unique to the business.

Stage

This is probably the biggest factor. Idea and prototype stage companies may have very lower costs, where a business that is producing and growing may have to support a full team, inventory, etc.

How Are You Going to Pay Your Bills?

One of my favorite questions I ask founder is "How are you going to pay your bills?

Almost everyone gets caught off guard. I am not sure why. When evaluating an angel investment, I want to make sure the founders are thinking through everything. 

Are you looking for investors for your business, contact us today, funding@omegaaccelerator.com.  

Are you interested in angel investing and helping us fund early-stage businesses? Email info@OmegaAccelerator.com. 

Sources and Links
https://techcrunch.com/2017/08/23/does-it-really-matter-how-much-your-startup-raises/
https://www.sba.gov/business-guide/plan-your-business/calculate-your-startup-costs#section-header-10

https://www.linkedin.com/in/rencarlton

https://rencarlton.blogspot.com
https://twitter.com/RenCarlton
https://www.youtube.com/channel/UCmxQWgUDlPJo0IHCIa6SzrQ
https://omegalegacyacceleratorx.com/924-2/https://www.facebook.com/TheOmegaAccelerator/
https://www.instagram.com/omega.funding/
https://rencarlton.blogspot.com/2019/09/funding-session-with-ren-carlton.html


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