So, you’re about to close on a $300k seed round and investors are asking for a first-year budget. Not having started a company before, the $300k number seemed right since other startups were raising a similar amount. Time to allocate the $300k and come up with a plan.
Here’s an example $300k budget for the first 12 months of a startup:
– Two founders with $40k salaries = $80,000
– Lead engineer @ $70k salary = $70,000
– Employer taxes = $15,000
– High deductible health insurance for the individual only @ $200/month times three people = $7,200
– Help with closing, operating agreement, and other standard docs = $5,000
- Domain Name
– Great domain name = $5,000
– Logo and simple branding = $1,000
- Office Space
– Three team members plus an un-paid intern for a total of four people @ $300/month = $14,400
– Used MacBook Airs for four people @ $1,000/each = $4,000
- Web Hosting
– $1,000/month on Amazon Web Services = $12,000
- Web Apps (CRM, marketing automation, help desk, accounting, etc)
– $1,000/month = $12,000
Adding up each of these items comes to a total of ~$225,000. Thus, the $300k seed round pays for a small team to work 12 months to find product / market fit with a healthy cushion to experiment on more items or stretch the runway out six more months (things always take longer than expected).
What else? What are your thoughts on this $300k budget and how would you change it?