Finance, numbers, budget, EBITDA, cash in, cash out….olalala! To most people this probably sounds difficult and extremely boring. It seems like a nightmare for people without the relevant background who plan to launch a startup, especially for biologists like in our case 🙂
Nevertheless, we had our ‘’crazy’’ idea, we launched it and we incorporated last year in February 2015. Then, the party started, officially!
In this post, I would like to focus on how we spent our first 100K (that was our budget for 2015). Transparency is always a good thing!
So here goes:
- R&D: As our product is a genetic test we need to keep up with all recent genetic advances, which have been rapid in the last few years. In addition, we obtained feedback from our first set of customers and were able to complement our genetic test with psychological findings. Nature and Nurture!
- PR and Marketing: As a biologist I always thought PR and marketing is easy. Welcome to the real world…. It is extremely difficult and it costs a looooot! Still, we got featured in Financial Times and in a host of Swiss publications, not too bad for a bunch of scientists making it for the 1st year in the cut throat world of start ups!
- Legal: Well, lawyers and notaries cost an arm and a leg as everyone is aware!
- IT: Building a website, buying domains, fix the overall IT infrastructure costs a lot too. Luckily outsourcing parts of it can save you big money. If it is done properly.
- Operational costs: It sounds quite general but we mostly attended conferences around the world, spread the news and made great contacts.
- Salaries: Well, not real salaries but some sort of compensation. We live in Switzerland, a great place but VERY expensive…if you think that $4000 after taxes is considered the minimum monthly salary on which you can have a decent life (a PhD does not count 🙂 ).
In conclusion with our 100K budget in our 1st year, we have a product that’s ready to sell (for sure there is lots of space for improvement). Keep in mind, it’s a DNA-based personality test, not so easy to make and promote as other products. We have started to generate some revenue, signed our first B2B agreements, almost ready for a 2nd investment and definitely ready to rock 2016!
If someone would ask, so what did you achieve? What’s in it for me to learn as a reader (something that I learned this year; always explain in simple words what’s in it for the other side, as it’s only obvious in my head). Well…have a look in the infographic above to get an idea about how to assign your budget (definitely will depend on what, where, who and how but our infographic may give you some hints of your future expenses). See where you could save money and where to spend more to make your startup better. No one can predict if this is the right way to do it but in our case, this year we will save money on R&D and Operational Costs and spent more in Sales & Marketing. And don’t forget to do it in a visually nice way so everybody gets it!
Lastly, I would like to say congrats to a great team! We all added our 2 cents in our unique individual way for the common startup good. We are 4 different nationalities, living in 3 different countries, talking 9 languages and we are still happy to go for a beer after work! Soon, we will share our Karmagenes DNA results to get a better insight at a genetic level. Everybody talks about the DNA of a successful team. We are actually, literally testing that 🙂
I hope that this post can give you some practical insights in the world of startups and finance and possibly some inspiration. It is a tough world for very early stage startups that have no connections, personal financing, lack of big name contacts to collaborate with and a challenging product/technology. Still we’ve made it quite far! Hopefully, in 2016 we will have the budget for expenses in the 7 digits ratio to share with you next year !
How did or would you spend $100K in the first year as a startup?
ps: it’s not about the money its about the strategy!