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Startups with tens of millions invested

Discussion in 'Black Hat SEO' started by jon_xx_x, Jun 15, 2012.

  1. jon_xx_x

    jon_xx_x Jr. VIP Jr. VIP

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    You read about new startups with millions, tens of millions invested in them. What do they actually need that much money for?
     
  2. lanbo

    lanbo Jr. VIP Jr. VIP Premium Member

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    ANything from inventory to sales marketing
     
  3. Troshi

    Troshi Senior Member

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    Still seems like a lot for "tens of millions"
     
  4. SahL

    SahL Elite Member

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  5. mrtwister_65

    mrtwister_65 Regular Member

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    Many businesses to become self-sufficient have to survive 1,5 years statistically, read somewhere. So if you add all the payroll for 1,5 years and all the promotion, office costs, promo actions, launches, celebrity endorsements - all that adds up.
     
  6. conrad

    conrad Regular Member

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  7. OldSalt

    OldSalt Moderator Staff Member Moderator Jr. VIP Premium Member

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    I had to do two business plans this year for college classes -

    1) As was mentioned - you look for 1.5 - 2 years of capital to open your doors. One of the leading causes of biz failure is insufficient capital

    2) If you're product or service needs people; people are VERY expensive! Add up salary plus benefits plus taxes and then multiply it by the number of people... yea... not cheap.

    3) Infrastructure isn't cheap either - building(s) or even space rental - equipment... it all adds up.
     
  8. apoorv

    apoorv Regular Member

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    Mostly building the technology - if it's a technology company primarily. See this answer on Quora: http://www.quora.com/Quora-company/...th-the-50-million-in-funding-it-just-received

    They received $50 million in funding and the answer is the owner's version of what they want to achieve. I don't personally see the need for anything beyond $5-6 million for a software/technology company in the short term (an year or so) but the VCs obviously think otherwise. Tons of companies are getting insane funding nowadays.

    Personally, I like what YCombinator does. I think that's a much better model.

    I also like what Dustin posted here: http://dcurt.is/quoras-50-million. Again, don't see the point of $50mil for Quora.
     
    Last edited: Jun 15, 2012
  9. Halilovic-Squad

    Halilovic-Squad Regular Member

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    to make money takes money...
    ...you might have heard it often in your live - and it`s like that.

    of course you can start a buisness with a small initial investment and start it off, trying to grow it organically.
    but if you want to go big you will have to invest big.
     
  10. ja1myn

    ja1myn Senior Member

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    Startup capital goes to, well, start up the business. If you sit down and think for a while about all the expenses of a large company, tens of millions of dollars is nothing.

    The worst thing a business can be is under capitalized.
     
  11. OiOiOi

    OiOiOi Regular Member

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    because there is a tech bubble.

    Most, but not all, start ups shouldn't need that much money to be profitable.

    VC's are out of their mind with giving money to businesses that are never going to make a dime.

    Look at instagram being purchased for a fucking billion dollars with 0 revenue. Facebook's recent IPO and collapse is evidence of this.

    It's a bubble, it's not like tech magically defies the rules of profitability.
     
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  12. wokaka

    wokaka Senior Member

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    im more interested in how they spend the money in marketing. Nobody ever talked about this in details..

    do they use the money to bribe the tech media to talk about them?
    do they use the money to sponsor tech events?
    do they use the money to create "buzz" like in facebook?
    do they use adwords and facebook ads etc.?
    do they sponsor local offline media?

    this kind of stuff u know

    because some companies can all of sudden get all the spotlights. Rage of Bahamut (DeNa's game) in android and iOS all of sudden becomes top app. If they didnt start big, definitely it wouldnt be this popular. and obviously casual users won't download the game if it wasnt popular. so how did they get from zero to 100,000 downloads? (before it finally went viral)
     
  13. jon_xx_x

    jon_xx_x Jr. VIP Jr. VIP

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    Thanks for all the replies.
    I gotta run out, but I'll read them all. Browsed them and seems like a lot of good info. Thanks.
     
  14. VinBed

    VinBed Regular Member

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    If you were to purchase a storefront on times square in NYC, would it really concern you if the previous business in that location had been making any money?

    Regardless of whether or not instagram has been monetized, it is an incredibly valuable asset.
     
  15. GoForMo

    GoForMo Newbie

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    Having worked for a startup that raised a few million I can tell you it goes like this..

    VC's put their guys on the board of directors.. these directors fly around the world 1st class/5star going to "important meetings" or in other words all expenses paid holidays on the company that basically produce nothing.

    VC's and directors then insist you need a "proper CEO" and set out to find one for you.. proper CEO demands a salary of $500k/year (plus expenses of course).

    Fatcat useless but "proper" CEO now installed within company decides to hire a support staff to make him seem like he's managing a proper big company instead of a scrappy little startup. So he hires his mates - Human Resources Manager first.. then a secretary to open the CEO's 2 letters per day and make him coffee.. then an accountant, even though the company accounts are already managed by one of the biggest accounting firms in the world.. and on it goes.

    Useless support staff to support useless CEO having been hired, he now decides he needs a bigger more prestigious office to house them all (not to mention his ego) so off he goes and rents some huge swanky office space and of course lots of expensive but rather comfortable office chairs to cushion their corpulent behinds.

    Now soon after all this hiring and jetsetting and pointless spending has taken place, the accountant hired by the CEO gives him some worrying news.. CEO then calls everyone for an important meeting (he's fond of having us all wasting time in meetings) and gives us the bad news.. they've run out of money, company is closing at the end of the month and we're all fired. Useless CEO moves onto his next victim.

    Such is the lifecycle of a VC funded startup.. happy days! ;)
     
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  16. OiOiOi

    OiOiOi Regular Member

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    You forgot the "emergency" round of funding that keeps the 25,000 $ a month office space open for another three months.
     
  17. Troshi

    Troshi Senior Member

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    So how do I go about becoming one of these crappy CEOs? Sounds like my dream job :D
     
  18. followinstagram

    followinstagram Newbie

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    starting from Coding to Marketing, and for the management of large no of users(servers and other stuff). The budgeting was probably taking into consideration of increasing no of users. Seems like there prediction was awesome and they got more no of users since launch.