Cost of Startups Decline and Funding Becomes Easier to Obtain
The Internet is connecting close to 2,5 billion people. If you were to launch a business today the Internet will most likely be a core component of your product/service or at least core component of your operation.
In addition to the number of people you can potentially reach the cost of delivering products and services over the
Internet has decreased dramatically over the last years. In a recent post from Mark Susters’ blog “Both Sides of the Table”, Mark claims that the cost of starting an Internet based business has dropped from $5M in 2000 to just $5K in 2011.
With programs like Y Combinator, which provides seed funding for Internet based startups, getting started has become achievable for many more entrepreneurs. Y Combinator usually invest $11,000 + $3000 per founder. So $17,000 for two founders, $20,000 for three or more. Occasionally they invest more. The goal is usually to give enough money to build an impressive prototype or version 1, which can then be used to get further funding.
In his recent book: The Startup Owner’s Manual: The Step-By-Step Guide for Building a Great Company Steve Blank is crediting Amazon web services for starting this trend.
Watch this video “The overlooked importance of Amazon” where his is making his points.