gregbo (gregbo) wrote,

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startup seed capital and founder debt

Paul Graham, author of Hackers and Painters, remarks in his essay on starting a startup that only a few tens of
thousands (of US dollars) are needed to start a startup. In his opinion, this is enough to
build a prototype. I'm not sure I agree. Depends on what you're trying to build. Or in
the case of a business that requires a significant amount of infrastructure to be successful
(such as a search engine), the prototype may not encompass a sufficient amount of what the
company would need to do to secure additional funding, a robust user/customer base, etc.

He discusses various other topics related to software on his web site. It is
interesting to read about people who are so enthusiastic about startups. I don't think I
have the stomach for financial risk that some of them do. PG makes a comment later in the
essay that a lot of people aged 26 are broke, so one might as well go broke trying to start
one's own company. I don't know if that's true, but if it is, I don't know that I'd recommend
racking up even more debt, or going into business without some kind of nest egg.

OTOH, he acknowledged the trend I am sensing that companies are starting to look at
acquiring startups as a more effective means of getting competent people than hiring them
individually and setting them to work on some in-house project. In his own words, "Want to
get hired by Yahoo? Start your own company."


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