The cost to launch a venture

When standing up a new venture at Hangar 75 we always set ourselves a launch target of 16-weeks, allocating 2,000 hours of effort. We’ve found that this level of investment should in most cases be sufficient to launch our first version of product to market, laying suitable foundations for further investment subject to achieving key performance metrics.

Allocation of effort

Note that before starting this stage we would have completed a 4-week / 100-hour, due diligence phase which looks to validate the idea and opportunity.

For the 2,000 hours of effort we would generally split based on the below:

• 5% Commercial modeling and business planning. Setting key objectives and outcomes.

• 15%: Articulating the ideas, user experience design and prototyping across the targeted devices and channels.

• 75%: Technology architecture, infrastructure, coding and testing.

• 5%: Marketing and socialization of the venture amongst target customers.

As you can see from the effort allocation 90% of our activity is focused on experience and technology which we feel is most important. At this point in the venture lifecycle we minimize marketing spend which can often be wasteful at the early stages. The low commercial and planning amounts are a result of that work being completed during the prior due diligence phase.

So assuming we have invested in 100+2000 hours of effort, and using your resource rate card which may vary based on your use of internal, freelance or agency resource you can start to articulate some investment numbers on which you can develop a more detailed commercial and investment returns model.