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First of all, this website has been greatly helpful to understand various things about startups. I am glad I found this website. I am starting a company (A web-based startup). I am pretty much new to funding. All I have right now with me is a solid business plan which I am really excited to execute and take it live. I have explained my concept to many (potential users) and all loved the idea and couldn't wait to see it live. I have very good experience in this niche (Social Networking). Right now, I am done with developing the concept and now want to get funded so that I can hire few employees and start the execution. Also I tried to get self-funded but the concept is vast and needs more money than that I have. So here are few question which I always think about and didn't find any answers. Hoping to get them here.

  • Can I get seed funding with just a solid business plan and little team (2) willing to hire once funded? I am looking for $300k.

  • How to valuate my startup and how much stake will I have to give away to the seed funding company?

  • If I get seed funded, how much salary can I expect as a sole founder of the startup? Is $25k per annum too much? I am planning to have less but some great employees and I don't mind giving them twice or thrice more as than my salary.

Really appreciate your answers. Thank you.

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2 Answers

up vote 1 down vote

Congrats on creating a business plan for your idea and moving forward with a start up! All three of your questions are great questions.

First Question: I am sure a company has been given seed money with just a business plan. What you will need to obtain funding will depend greatly on the investor.

Second and Third Question: Sal Khan does a great job talking about Venture Capital and Capital Market. Links to his Youtube tutorials can be found on his website (www.khanacademy.org) under Venture Capital and Capital Markets. Watching them will give you a great fundamental understanding of this topic and most likely answer your questions.

Best of Luck

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Thank you for the link. I went through all the videos. They were helpful but he did not mention how we valuated the startup. I would love to know that. – innovationlover Aug 7 '10 at 12:30
up vote 1 down vote

The business plan is less important than whether the investor thinks the team will be able to execute, learn from the market, and adapt into something of real value. And less important than whether there's a market and a way to extract money from it.

A $25k salary is a great place to start. It means you need to pay a mortgage but otherwise you're 100% devoted, and that's exactly the right attitude.

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I understand team is important. But due to complexity of the concept I need to put in some good amount of money to hire best guys. And I don't have that kind of money right now. But I am sure I can find good employees who can execute exactly how it needs to be executed. I just want to know, can seed funding company fund me if this is the case? – innovationlover Aug 7 '10 at 12:35
I forgot to thank you for the answer! :) – innovationlover Aug 7 '10 at 12:36
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No, if you need to hire the best at normal salaries than you cannot do it on seed money. Hopefully you can find people who are also in a place in their life where they can trade immediate cash for future reward. – Jason Aug 9 '10 at 4:20

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