I'm finally at the stage where it's time to stop coding for 12 hours a day and it's time to raise capital - I've been approached by an angel investor who asked for a 6 month budget.
The project is a niche dating site in a moderately competitive space. I spend about $1k/month on advertising, and another $1k per month hiring freelancers to do misc tasks. I have a target # of users and features to implement in the 6-month time frame.
I've crunched it all together, added a salary for myself, 2 full time software developers, 1 part-time marketing person, $3k/month advertising, $30k marketing/branding agency costs and came up with around $200k. This sounds somewhat low to me, but I do not have anything to compare against.
Anybody been/in a similar situation or anybody can advise ?
Now this does seem to be on the low-side. Hopefully, you can measure you ROI so anything spent on SEM or Paid Search will be worthwhile.
I have heard from experienced entrepreneurs to "take your budget and double it" to come up with a number when speaking with investors. The reasons are: 1) things never work out as planned; and 2) leave yourself with enough runway...
That being said, it was much easier to say it was too high (before the edits) now it does seem that you could easily add 50-100k..
This budget sounds ok to me, comparing to the budgets of startup-s that I worked in. In my country salaries are probably comparable to the Egypt. You business seams to require big marketing budgets. Just make sure to include in the calculation every expense that you will have expected or unexpected. We actually survived much more time with $200K and 10 developers but without spending for marketing.
Your biggest expense is your developers. I am assuming you are in the USA. Use offshore developers such as those in Belarus or Ukraine. You can find a great programmer offshore.
With software, planning is the majority of the work. Plan everything in advance, including user interface. The more you tell your designers and programmers about your vision, the less they have to think / charge you.
As for marketing... I think the bulk of your money should be spent on marketing, with this caveat, if you spend $$ on something it should deliver immediate results. Many advertising firms tell you that you have to build a brand before making $$ that is not true. A good ad campaign pays for itself, the time to manage it, and builds profits.
If you are going with us developers you may be able to offset your expenses by using interns or junior level developers. It may take them an extra month or two, but the savings will be worth it, and you can always make changes as you become more successful.