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Private Equity: Need an expert advice on budgeting for a startup and equity allocation in the startup.

Trishul Patel, Product at Accel answered:

1. Before you dive into building out marketplace software you might find it easier to quickly test your MVP using a SaaS product like https://near-me.com/. I am NOT affiliated with them. But in a previous startup explored the marketplace concept. Spend 12K for a year on a SaaS product then spending so much more doing it from the ground up. If you gain momentum then start to build out your own platform.

2. Technical Co-founder is the person who will help bring your idea to life so enough skin in the game to keep them motivated and keep him/her hungry.

3. Remember 100% of 0 is 0. So if the CTO wants 20%-25%. Does it really matter at this point? No it doesn't.

4. Make sure you understand how to tackle the marketplace problem of the chicken and egg. You have supply on one side and demand on the other. What comes first? You should think through that as well.

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Question

I am trying to build a marketplace concept in travel domain. I have received $ 100K in funding from an angel investor. The product development has not been started yet. I have come up with wire frames for the product and now need to start engineering execution of the product. I am following the "Lean startup" approach of developing an MVP first to achieve product-market fit. Want to know how much budget should be used to bring a product to launch and how much money should be budgeted for paid marketing. Our goal here is to achieve Series A funding within 18 months without running out of money. Also, an additional question will be, I am trying to get somebody as a technical co-founder, how much equity should I be giving him? Please shed your thoughts and would like to jump on a call with you.

Marketing Strategy

Answer

Trishul Patel answered

1. Before you dive into building out marketplace software you might find it easier to quickly test your MVP using a SaaS product like https://near-me.com/. I am NOT affiliated with them. But in a previous startup explored the marketplace concept. Spend 12K for a year on a SaaS product then spending so much more doing it from the ground up. If you gain momentum then start to build out your own platform.

2. Technical Co-founder is the person who will help bring your idea to life so enough skin in the game to keep them motivated and keep him/her hungry.

3. Remember 100% of 0 is 0. So if the CTO wants 20%-25%. Does it really matter at this point? No it doesn't.

4. Make sure you understand how to tackle the marketplace problem of the chicken and egg. You have supply on one side and demand on the other. What comes first? You should think through that as well.