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How Much Money Is Enough Money To Start A Company [infographic]

Raising big money for starting a company or expanding one is a norm now, specially in the tech industry. Where we don't have funding structure and opportunities, country like Bangladesh, we keep complaining for not having enough angle investors and VCs to back out dream startups.

Many people go even further by blaming lack of funding for their failure to start a company. If only we had proper funding culture, we would have several Uber [s] and Airbnb [s] running up and down here.

However, the truth is that VC funding is a very recent phenomena. Before VC funding, people started and built businesses and even these days there are countries where culture of VC funding is yet to reach.

It is true, there are businesses that require significant cash injection to grow big and generate revenue and VC funding helps these companies to do that.

But, then and again, it entirely depends on who is building the company. The option to start small and gradually grow big is always there. For these category of entrepreneurs raising money is always secondary and starting a business for them is easier than the people who run after funding.

Probably funding is critical for tech startup's success but it is not the only critical factor. There are more to it.

Funding is only a tiny part of what you need to build a business and there are more than one way to raise money.

Below is an infographic by Fundersandfounders depicting how much money few tech companies started with and it tells an interesting story.

enough-money-to-start-infographic
enough-money-to-start-infographic

Tech is a strange industry. Here winner takes it all and winning is often a long game. It is hard to argue that money is not a critical factor for growth. Often it is. Although money does not solve many problems startups have, it does solve most important ones: it buys you extra time and it helps you to have great people.

While money does help in building a big company but it is easy to overspend in a startup as well. There are areas where you probably don't need to spend much but you end up spending, for instance, cool office, fancy gadgets etc. It is wise to keep your burn rate low but it also calls for a good judgement.

Below is yet another infographic showing how much big tech giants raised over their life time.

enough-investment-to-succeed-infographic
enough-investment-to-succeed-infographic

Final take

There is a brutal competition going on. Raising more money is part of that competition. More money gives more strength to companies to compete in the market and win. However, to reap the benefits of extra fund you have to get your basics, like product-market fit, right. If that is okay, rest should follow.

Ruhul Kader is a technology and business analyst based in Dhaka, Bangladesh. He is also the co-founder and CEO of Future Startup and author of Rethinking Failure: A short guide to living an entrepreneurial life. He writes about internet business, strategy, technology, technology policy, and society. He can be reached at [email protected]

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