As the cost of most things rise, one very important thing costs less – starting an Internet based company. There is general agreement among my friends, associates and recent stories in the media that one can start a viable Internet based company with $50,000 to $250,000. This compares to $5MM – $20MM about ten years ago. [See Fortune story on Marc Andreesen’s new investment fund, and VentureBeat blog post “Seed is the new Series A for VCs”].
My experience is consistent with these new views and I think that we may see the ante go even lower. Here are some of the reasons why costs are ramping down:
- infrastructure and site hosting handled in the cloud through solution providers like Amazon EC2
- new rapid development and content management tools
- open source (free) solutions
- global workforce of skilled workers with Internet experience
Times couldn’t be better for entrepreneurs. When coupled with the chaos unleashed by the credit crunch, market meltdown and Great Recession, we’re due for a rush of innovation spurred by economic disruption on one side and low barriers to entry for new businesses on the other.
I’d love to hear about your experiences and views – what and how much does it take to get an Internet business started these days?
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I think this article is very interesting on many levels.
While working as an independent web consultant for the past 7 years, I have seen a drastic change in website start-up costs since open source products like Wordpress and Expression Engine hit the mainstream. 10 years ago, even the simplest CMS’ had to be built and customized for each client and generally the cost ranged from $20,000 – $200,000 depending on their level of control and complexity.
I also find these statistics interesting because I can personally vouch for the fact that staring an internet based company is far cheaper than ever before. My brother and I decided to embark on a new venture 5 months ago and our total out of pocket expense to date has been $500! Of course we have committed countless hard working hours to the project but there is no way we could have done it 5-10 years ago. Even today, the simple goal remains: to build a business model centered on innovation that can eventually give back the most “bang” for your startup “buck!”
It’s no doubt that in today’s day and age, web-based open source technologies coupled with free social marketing tools can catapult even the semi-savvy entrepreneur.