The Nuts and Bolts of Startup Funding

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When it comes to getting your tech startup off the ground, there are always good news and bad news. The good one is that if your idea is indeed as brilliant as you think, you have good chances to become a new Steve Jobs or Elon Musk and build a big company. But the bad news is that the road leading you to the business you dreamed of will likely be rocky and full of personal and entrepreneurial challenges.

To help you in this way, we decided to dedicate this article to one of the most tricky issues you probably faced right after the ingenious idea for a startup had rung your doorbell. As you may have already guessed, it’s funding, since regardless of what exactly you envision as your future business, it’s crucial to know how much money it will cost you.

Startup Funding (Startup Capital) — is the money needed to launch a new business. It can come from a variety of sources and can be used for any purpose that helps the startup go from idea to actual business.

The Startups Team

Let’s start with a brief overview of typical startup costs.

How to calculate funds needed to start a business

To determine how much money you should collect for your startup, first, think about the costs you will incur during the initial stage, i.e. before your business brings you any profit. So what exactly do you need to open a business? There are many types of expenses you may have depending on your location, industry and future business activity, but here are some categories you most likely have to take into account:

Organizational expenses

These are all one-time costs related to the incorporation of your business. They may include state fees required for the registration of your company, receiving compulsory licenses/permits, hiring legal professionals, purchasing necessary equipment/furniture, designing a logo, etc.

Product expenses

This is probably the most significant part of your overall costs. It comprises expenses on the development of your digital product, as well as expenses on its launch (including costs on product promotion).

Ongoing expenses

Rent, utilities, taxes, salaries for your employees, payments for other services you plan to receive on a regular basis for at least the first 12 months after the launch must be also considered when calculating your initial startup capital.

The above list is, of course, non-exhaustive. To determine how much money you need to start a business, you have to conduct comprehensive research and define all other additional costs that may apply in your case. Lots of startups fail because their founders underestimate the amount of money they need at the beginning. To avoid this trap, we recommend you to assume that everything will cost more than you expect and some unforeseen issues will likely arise as well. So when you create a budget for your business, it’s a good rule of thumb to consider a small “safety margin”.

Industries to invest in 2021

  • Online Education
  • According to the current situation all over the world, online education is definitely worth to invest. As most schools and universities go to remote online studying, there is an urgent need for more educational platforms where students and professors can keep in touch. Online education gives the ability to learn everything you want, find any required information on the web, and share it with your classmates or tutors. Also, it gives the opportunity to study for everyone despite age, gender, state of health, and level of knowledge. So there are more and more different educational services that simplify remote studying. 
  • Healthcare
  • Nowadays the healthcare industry is swiftly developing and implementing modern technologies to improve the quality of treatment. The telemedicine app development, EHR systems, and other services are integrated into many medical facilities that help to track patients on the distance, define the right diagnosis, and suitable therapies.
  • Chatbot service
  • Chatbot Services Chatbots are implemented on most modern websites as human resources cant cope with this huge amount of customer information and their questions. This technology helps to provide an excellent customer experience. help the customer get quick responses. Investing in building a chatbot service can be really beneficial.
  • Delivery service
  • Delivery services have always been a popular way of earning as it is constantly actual and in demand. Due to quarantine conditions, many people started to use the services of delivering more actively. It can be anything – goods, food from cafes or restaurants, parcels, and many other things. There are a lot of things to improve in the quality of services – quicker delivery, a wider range of offers, discounts, 24\7 open, etc. This area has ways of improving and expanding, so it is worth to invest.

Conclusion

You may have a brilliant idea for a startup, but if you want to launch it quickly and successfully, you also need money. The exact amount of funding you should have to get your business off the ground mainly depends on the cost required for your product to be developed. The minimum threshold for product development is about $50,000 while the average numbers are between $100,000 and $200,000. To raise the initial capital, you can use crowdfunding platforms, apply to angel investors or venture capitalists, or attend startup accelerators and incubators.