The True Cost of a New Idea
What does it cost to launch an idea? And who should pay for it?
By Saul Garlick
So you have a new tech idea.
Maybe you want to create a mobile game, or a new productivity app, or a different approach to learning. Perhaps you think AI should be leveraged in a different way that would serve a specific market or community.
Whatever you’re considering doing, you’re probably wondering what you’re getting into. Put differently, what will it cost? And who should pay for it?
First, I want to briefly cover where the money comes from.
Where does the money come from?
Most founders immediately assume they should raise money from venture capitalists for their new idea. In reality, that is rare. Money raised for an idea usually comes from friends and family or angel investors you meet along the way.
Before we proceed, let’s have an honest discussion about venture capital and where things stand today:
Entrepreneurs have won some battles along the way—characterized by big exits that make the headlines—but they’ve pretty much lost the war with venture capital. Venture capital today is much more interested in financing sure things than exploring new possibilities. There are exceptions like our friends at Sapir Venture Partners, Cartan Capital, and Park Ranger Capital, but if we are honest, Venture has been the biggest winner.
What have they won?
They have won the war over how to launch an idea. They have convinced entrepreneurs at numberless incubators and accelerators that their primary focus should be on The Pitch.
The Pitch, of course, is the pitch to investors. Not the pitch to customers. Not the pitch to employees.
The amount of money that has gone into making sure that every founder is obsessed with how they will present their case to investors is incalculable. Honestly, I don’t even want to think about it because it makes me feel a little sick.
What really needs to be worked on is how to get a new idea off the ground—without venture capital. Venture dollars just don't care about brand new, untested ideas the way they used to (I think that’s a shame, but it really is what it is).
So what is an entrepreneur or any business with a new tech idea to do?
Get REALLY, REALLY clear on how to get something off the ground.
Ultimately, a new tech product is a lot like launching any other product. It’s an investment of time and resources.
So let’s get into the real costs (time and treasure).
What a New Idea Costs
Every new idea should go through 3 phases:
Prototype
MVP
V1
The Prototype is a rough, early version of a product used to test key concepts or features before full development begins. Its purpose is to validate assumptions, explore ideas, and gather early feedback from stakeholders or potential users. Prototypes can be low-fidelity (e.g. paper sketches, wireframes) or high-fidelity (e.g. clickable designs or limited-code mockups). Prototypes are not functional or scalable; they are meant for internal use or very limited testing.
The Prototype should cost you less than $35,000
The MVP (Minimum Viable Product) is a functional but minimal version of the product that includes only the core features necessary to deliver value and gather user feedback. It is created to validate product-market fit with real users while minimizing development time and cost. The MVP is a live, usable product with basic UI and infrastructure, often launched to a limited audience. You would build an MVP to prioritize speed and learning over polish or completeness. The focus here is on testing hypotheses.
MVP should cost you less than $350,000
V1 (Version 1) is the first full public release of the product, often after incorporating feedback from MVP testing. With this product you are ready to enter the broader market with a more robust, reliable, and complete solution. It is a stable, reliable user-ready product with a polished UI/UX, tested infrastructure, and expanded features beyond MVP. By now you are building for scale, acquisition, and user retention. It’s a V1, so you will likely still lack some long-term features but it represents a market-ready offering.
V1 should cost you less than $600,000
The cost of each phase is specific to product development requirements of course. It does not factor the overall startup costs which include legal filings, insurance, tech and equipment.
These numbers don’t include your personal income.
If you already have a business that pays your bills, you can rely on that while you invest in the new idea.
If you do not, you have basically 4 choices:
Self-finance the new idea while dipping into savings for your cost of living
Self-finance your new idea while working to pay for your cost of living,
Raise capital (from Angels) for your new idea to cover product development and NOT your salary/cost of living.
Raise capital (from Angels) for your new idea to cover product development and your salary/cost of living.
Realistically, it will be tough for you to raise capital if you are not committing to the idea 100%. You can raise from friends and family, but even they will wonder why they are writing a check if you are not all in. So getting things off the ground can be really daunting.
However you secure the funds to get your idea off the ground, it's critical to allocate those initial resources strategically.
Focus first on product development, ensuring that you're building something valuable and viable.
Invest in technical talent who can bring the concept to life with quality and scalability in mind.
Prioritize infrastructure that supports growth and stability, and don't overlook the importance of thoughtful UI/UX design—it’s often the difference between user engagement and abandonment.
Most importantly, dedicate time and money to customer research and validation. Avoid the costly mistake of building the wrong thing by collecting real data from real users as early as possible.
Notice that I am not suggesting investing heavily in brand development and marketing early on. This is not an oversight. When you start building a product idea, you will want to have a name for your company or product, and you will want to have the design elements to build it based on your design UI/UX work, but don’t make any marketing spend at this point. Keep your focus on your customer, and delighting them with a solution they love.
Your idea is what you’re passionate about. Now go build it!