4 ms·
Ask HN: How much money should you have saved before you start a startup?
Here's what I'm currently thinking:
You need money for two things:
1) Living expenses while you work on your startup, taking into account the possibility of revenue and raising money.
2) Runway for you to live off of if you fail and need to find a job.
Runway for startup:
- Optimal: 2 years of living expenses (LE)
- Realistic: 6 months LE
- Risky: 3 months LE
Time to find a job (obviously this depends on your skills and industry, but let's assume that you're a reasonably skilled software developer):
- Safe: 6 months LE
- Realistic: 2 months LE
- Risky: 1 month LE
Thoughts on this?
Also, I have a separate question - what is common practice amongst people who start startups? How much do they save up before doing so? Note that this is a different question (SHOULD vs. DO).
- leesalminen 12y agoI kept my day job and worked furiously at night / on weekends. Meditation to help prevent burnout. I wouldn't recommend doing it forever - perhaps just through MVP. If you have kids/wife this may not work.
- WalterSear 12y agoI wouldn't say 6+2 months of living expenses is 'realistic'. I would term that 'wishful thinking'. And a 3 month 'risky' living expenses for a start up is what I would call "I'm vastly underestimating what I got myself into." The founders at my current job have been working at this for 4+ years. We just received series A funding. Any expectations of an IPO or other exit are at least another 3+ years from now, and that's also a 'wishful thinking' number.
- adamzerner 12y agoAs for startup living expenses, I meant that as taking into account the possibility of revenue and fundraising. I'll edit the question to clarify.
- WalterSear 12y agoIf you already have angel funding in place, then certainly take that into account. Otherwise, IMHO, I still think your runway timing is suicidally optimistic, particularly if this is your first 'go' at this.