Startup Costs Breakdown: What Does It Cost to Start a Company?
"How much does it cost to start a startup?"
The honest answer: anywhere from $0 to millions. Here's a realistic breakdown.
Pre-Launch Costs
Incorporation
| Item | Cost | Notes | |------|------|-------| | Delaware C-Corp (DIY) | $89-150 | State filing fee only | | Delaware C-Corp (Stripe Atlas) | $500 | Includes registered agent | | Delaware C-Corp (Lawyer) | $2,000-5,000 | Full legal setup | | Registered Agent | $50-300/year | Required for DE corps | | EIN (Tax ID) | Free | From IRS website |
Recommendation: Stripe Atlas or Clerky for most startups. Save legal fees for when you raise.
Legal Basics
| Item | Cost | When Needed | |------|------|-------------| | Founder agreements | $0-2,000 | Day 1 (use templates) | | IP assignment | $0-500 | Before building | | Employee agreements | $0-1,000 | First hire | | Privacy policy/ToS | $0-500 | Before launch | | Trademark | $250-400 | Optional early stage |
Total legal (bootstrapped): $0-1,000 using templates Total legal (proper setup): $3,000-8,000
Tools & Infrastructure
| Category | Monthly Cost | Examples | |----------|-------------|----------| | Domain | $10-50/year | Namecheap, Google Domains | | Hosting | $0-50 | Vercel, Netlify (free tiers) | | Email | $0-6/user | Google Workspace | | Code hosting | $0-20 | GitHub | | Communication | $0-10 | Slack (free tier) | | Design | $0-15 | Figma (free tier) | | Analytics | $0 | Google Analytics, Plausible |
Total tools (lean): $0-50/month Total tools (comfortable): $100-300/month
MVP Development Costs
If You Build It Yourself
| Cost | Amount | |------|--------| | Your time | Opportunity cost | | Tools/hosting | $0-100/month | | Design assets | $0-500 | | Total cash | $0-1,000 |
If You Hire
| Option | Cost | Timeline | |--------|------|----------| | Freelance developers | $5,000-30,000 | 2-4 months | | Dev agency | $30,000-150,000 | 3-6 months | | Technical co-founder | Equity | Ongoing | | No-code MVP | $0-500 | 2-4 weeks |
Recommendation: Learn no-code or find a technical co-founder. Outsourcing MVPs rarely works well.
Monthly Operating Costs
Solo Founder (Pre-Revenue)
| Category | Monthly | |----------|---------| | Rent (home office) | $0 | | Tools & infrastructure | $50-100 | | Marketing | $0-200 | | Legal/accounting | $0-100 | | Miscellaneous | $100 | | Total | $150-500 |
Small Team (2-3 people, Pre-Revenue)
| Category | Monthly | |----------|---------| | Salaries | $0 (equity only) or $15-30K | | Coworking/office | $0-1,000 | | Tools & infrastructure | $200-500 | | Marketing | $500-2,000 | | Legal/accounting | $200-500 | | Benefits (if paying salaries) | $0-3,000 | | Total | $900-37,000 |
Post-Seed (5-10 people)
| Category | Monthly | |----------|---------| | Salaries + benefits | $80,000-200,000 | | Office | $2,000-10,000 | | Tools & infrastructure | $1,000-3,000 | | Marketing | $5,000-20,000 | | Legal/accounting | $1,000-3,000 | | Travel | $1,000-5,000 | | Total | $90,000-241,000 |
Fundraising Costs
Pre-Seed/Seed (SAFEs)
| Item | Cost | |------|------| | Legal fees (simple SAFE) | $0-2,000 | | Pitch deck design | $0-1,000 | | Data room setup | $0 (Google Drive) | | Total | $0-3,000 |
Seed (Priced Round)
| Item | Cost | |------|------| | Legal fees (your counsel) | $15,000-40,000 | | Legal fees (investor counsel, sometimes paid by company) | $5,000-15,000 | | 409A valuation | $1,000-3,000 | | Total | $21,000-58,000 |
Series A
| Item | Cost | |------|------| | Legal fees | $40,000-100,000 | | Accounting/audit prep | $10,000-30,000 | | 409A valuation | $3,000-10,000 | | Total | $53,000-140,000 |
Cost by Startup Type
SaaS Startup
| Phase | Cost Range | |-------|------------| | MVP | $0-10,000 | | Launch to first customers | $5,000-30,000 | | To $10K MRR | $20,000-100,000 | | To $100K MRR | $200,000-1,000,000 |
E-commerce
| Phase | Cost Range | |-------|------------| | Store setup | $1,000-10,000 | | Initial inventory | $5,000-50,000 | | Marketing to first sales | $2,000-20,000 | | To $100K revenue | $50,000-200,000 |
Hardware/Physical Product
| Phase | Cost Range | |-------|------------| | Prototyping | $10,000-100,000 | | Tooling | $50,000-500,000 | | First production run | $100,000-1,000,000 | | To market | $500,000-5,000,000 |
AI/ML Startup
| Phase | Cost Range | |-------|------------| | MVP (using APIs) | $1,000-20,000 | | MVP (custom models) | $50,000-500,000 | | API costs at scale | $10,000-100,000/month | | GPU/compute | $5,000-50,000/month |
How to Minimize Costs
1. Use Free Tiers
Almost every tool has a startup or free tier:
- AWS/GCP/Azure startup credits
- Stripe Atlas ($500 all-in)
- Google Workspace free for startups
- Notion free for small teams
- Linear free tier
- Figma free tier
2. Defer Non-Essential Spending
Don't buy:
- Office space (work from home)
- Premium tools (use free versions)
- Business cards (use LinkedIn)
- Expensive branding (do it later)
3. Do It Yourself
Learn:
- Basic design (Figma)
- Simple legal docs (templates)
- Basic accounting (spreadsheets)
- Marketing (content, SEO)
4. Trade Equity for Help
Early-stage options:
- Technical co-founder vs hired devs
- Advisor equity vs consulting fees
- Contractor equity vs cash
Runway Planning
Use the formula:
Runway (months) = Cash / Monthly Burn
Example:
- Cash: $500K (seed raise)
- Monthly burn: $50K
- Runway: 10 months
Target: 18-24 months runway after each raise.
Calculate Your Costs
Use our tools:
- Runway Calculator - Project your burn rate and runway
- Equity Calculator - Compare equity vs cash compensation
- Unit Economics - Model profitability
Key Takeaways
- Start lean - Most MVPs can be built for under $10K
- Legal adds up - Budget for fundraising legal costs
- People are expensive - Salaries are usually 70%+ of burn
- Free tiers exist - Use them aggressively
- Runway matters - Always know your runway
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