Friday, November 10, 2006

Web 2.0 startup costs

Starting up is cheaper than ever before. Founders can fund the essential startup costs themselves, mostly on servers and hosting in case of Web 2.0 startups.

Creating a proof of concept is easy now. Web 2.0 startup founders know that it is essential to start ASAP, create a basic application and put it in front of a core users' group who do the testing, suggesting and viral spread work. Bootstrapping is in a big way.

VCs often do not come in the picture.

- Digg was started on $99 servers and hosting.
- Excite Founder Joe Kraus’s new startup JotSpot, was started on just $100,000.
- Meebo founders financed the startup themselves by using their credit cards to the tune of $2,000 apiece.

Smaller VC funds are in
Paul Graham’s Y Combinator has a rule of thumb: it invests in start-ups at $6,000 per employee.

“C.S. grad students at M.I.T. currently get $2,000/month to live on, so this represents three months’ living expenses. Though in fact most groups make it last longer.”

Another VC Charles River Ventures offers loans of $250,000 to entrepreneurs as a way to gain access to promising start-ups. Earlier VCs frowned on anything below $ 5 million.

Appropriately, another VC says that $500,000 is the new $5 million.

I am thinking of creating a list of web2.0 startups and their initial funding. Media startups are also included. Help will be appreciated.


At 2:13 AM , Anonymous Anonymous said...

I recently found a very interesting website:
There you can purchase ad space for your Blog etc.

At 12:57 AM , Anonymous Jackie said...

Many companies also provide incentive programs for startups as well, making even the cost for servers and hosting relatively nominal by offering deep discounts. Sun Microsystems has a program called Sun Startup Essentials,, it's worth looking into.


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