So how much does it cost to start a company in India? 2Lakhs/5?
Prateek Dayal, Founder of Muziboo (read our review) does some math for you.
When we started Muziboo two years back, we had no idea how much money was needed to get a company off the ground. Both Nithya and I had our day jobs and we never consciously worked out the finances. We started to think about money only when we went full-time and eventually went broke. Like most people who have no entrepreneurial experience, we only thought of hosting costs (and were wrong there too!). During the course of two years, we have realized that even though its possible to bootstrap a startup cheaply, you need substantially more than $0. Here are some of the costs we have encountered on the way
Hosting & Backup Costs
Depending on how fast your site grows, you will have to get atleast a VPS server and eventually a dedicated server. Shared hosting does not work out most times for anything serious. For a VPS, you can expect to pay around $50 a month and for dedicated hosting, something around $150 a month. You will also need to invest in backups. We backup all user data (mp3, photos) and database dumps at S3 using s3sync. You can always backup locally on your harddisk but you need to consider how much it will take for you to restore all the data over your DSL connection. You would also wanna signup for a service like pingdom to receive sms alerts if your service goes down.
Apart from hosting and backup costs, you may have to spend on code/ticket hosting. You can always host your own svn/git and trac but its always better to outsource that kind of stuff. When you are starting with a small team (1/2 people), you can expect to pay $5 – $10 a month. Putting everything together, you can expect to pay around $200 a month on your hosting needs (once you achieve some reasonable scale). This comes down to about $2400 a year or Rs 120,000. Overall, you can expect to spend around Rs 130K to Rs 140K a year on your hosting related needs.
Chairs & Desks
If you are gonna be working fulltime on your startup, you will have to invest in great chairs and decent desks. You cannot work on a bean bag or your dining table every day as its gonna kill your back. We got two simple desks (Rs 1000 each) and two good chairs (Rs 3500 each). So for two people, expect to pay around Rs 10,000. You may also wanna invest in a whiteboard to make sure you have a place to discuss stuff. A decent sized board would cost around 3k.
Computers & Peripherals
You will need to get two desktops (or two insanely great laptops). I personally find working on laptop for long hours very hard. Depending on what you buy, you will need to spend atleast Rs 25,000 per person. Over time, you may have to buy better monitor or better keyboard (the Rs 500 keyboard sucks if you work 8-10 hours a day). If you are buying desktops, you will need to buy a 1KVA UPS which should cost around 20k. If you are buying laptops, you still need to buy a small UPS (Rs 3500) to power up your modem and router in case of power failure. Total costs for this kind of setup should be atleast 80k.
You will need to get some legal documents in place. You will need Terms and Conditions and privacy document written up by a lawyer. Lawyer costs vary a lot so I can’t really talk about any estimates. It depends on what business you are in and how much work the lawyer will have to put in to get your documents ready. You should still expect to spend atleast Rs 25,000 on this . You will also have to file with the copyright office in US and register a designated agent for DMCA complaints with them . This process costs $80 (one time) and more details can be found here. This is absolutely necessary if you have a site where users are going to put up content. Filing this document makes sure that you can’t be sued without being given a chance to remove the offending content from your server first.
So overall , you will need about 2.6 lakhs in the first year to get your venture off the ground. Since this does not include any salary and office rent, you would need sufficiently more. For a two people startup, working out of a house (Rs 10,000 a month) and living a very basic life (Rs 20,000 a month), you will need 6 lakhs a year.
So overall, you need about 9 lakhs worth of investment to get even an internet startup off the ground.
[Republished from Prateek’s blog]
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