My answer to I recently got $10 million in seed funding, how should I set up my startup?
Answer by Raad Ahmed:
I would agree that obtaining that much funding BEFORE solidifying a plan is definitely not something you see everyday in the world of startups.
However, since you have the money already, it’s definitely important to tread lightly and avoid spending money unnecessarily. $10 million sounds like a lot, but if you don’t use the money wisely then your company is going nowhere.
At any rate, you’ve asked for some pointers about what to do with the money and here are a few areas that are probably worth the cost.
Business plans—You’ll hear a lot of different opinions about the necessity of a business plan and when you should create one—but I think its always best to have an idea of how things will really operate. Plus, without a business plan it’s going to be much, much harder to determine goals and milestones.
Marketing—Create a compelling marketing strategy and executing that strategy are everything when it comes to business success. You have to understand your customer and provide the message that will capture their interests.
Legal Costs—The legality of business can be overwhelming and one mistake can cost you a lot of time and money. It’s best to invest in a quality legal service right from the start. It’s an expense that will likely pay for itself.
As far as the other specifics you’ve asked about—keep in mind that you should cut costs anyway that you can. A really extravagant office space, hiring too many employees before you are ready, or giving yourself a steep salary will not lead to the payoff you are looking for.
When it comes to places to incorporate—think about where you will be conducting business and take a look at the requirements for licensing, reporting, and overall costs. Good luck!
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