How much money should my company raise?

[ctide]

Budget at least $80k/employee in payroll, benefits, insurance, and misc costs. (you'll have to budget more if you plan on hiring more experienced talent)

Competent engineers are willing to get hired for what amounts to ~35k / year?

.... What?

[kapitti]

Came to post the exact same thing. With 20-30% going to insurance/benefits, taxes, misc costs - that's an amazingly low number....even more so considering they're in SF.

[Aloisius]

I wish I could pay people that. I'm probably above $100k/employee in SF.

[sudonim]

I found this statement pretty surprising. Maybe in the next step when it gets doubled, that's a more realistic number. $160k/employee? Either that or the only employee is an office admin?

[brandall10]

She did say employee, not engineer. Still low but I'd gather the equity share is good.

[rdl]

80k per developer is quite reasonable, exclusive of actual salary.

[axiom]

I think their salaries are 60-65k.

Insurance/benefits for 20 something developers at a startup consists of ramen and free pizza on Mondays.

That's actually a very reasonable salary and keeps out the guys who are looking to collect fat paychecks working 35 hours/week. You want work/life balance and 100k+ per year? fine, go work at Google. If you want the upside that comes with working at a startup you need to be willing to take on some of the risk.

[pagekalisedown]

Maybe she staffs up exclusively with H1Bs?

[emrosenf]

Bravo Jessica! I think people here may be missing the crux of the article: building a real business -- rather than an initial product -- is quite expensive.

[Joakal]

Why is it 'crazy' to try to raise as much possible?

[donw]

When you've first started out, you haven't generated a lot of value, even if you've got a plan, a great team, and an MVP. Your company just isn't worth very much at this point, which is why early-stage (angel) investors get large amounts of equity for very small amounts of money.

By raising a large amount of money at a low valuation, you limit your options for future financing, as you can only offer a smaller slice of the pie to future investors, and have to do it at a higher valuation in order to keep your initial investment team happy.

[pbreit]

Because 1) it can easily lead to sloppiness and 2) it can significantly decrease your exit options.

[rudiger]

How much capital do you wish to raise?

[rorrr]

Whenever I see news about some startup raising $400K or something like that, I just can't think of what to do with this amount of money (in USA at least). It's so little. Good developers are expensive. Great developers are very very expensive. $400K can get you maybe 2 good developers + an accountant + crappy office space for a year + all kinds of expenses.

[culturestate]

I agree. We're lucky to be building in a desirable but relatively cheap part of Florida (Gainesville, home to the University of Florida and Grooveshark, and in a state with no income tax) and $400k doesn't stretch very far. I can't imagine what it would be like building in the valley or NYC on that.

[robryan]

It depends really, if you don't expand and just work as cofounders willing the take just what they need to get by then that kind of money is going to last a long time. You are right if you are looking to hire full time employees though.

[angryasian]

if a team consists of technical talent, and hiring a junior developer or two, makes sense.

[axiom]

One of the major reasons some of the funding rounds are so big is that a large chunk of the money is going to buy equity directly from the founders rather than going into the company.

[joshu]

Not on the seed or A round they aren't.