In a startup scenario with a $4,000 monthly lease, a $1,000 licensing fee, $15,000 per month in material costs, and a 10% contingency, how much startup capital is needed?

In a startup scenario with a $4,000 monthly lease, a $1,000 licensing fee, $15,000 per month in material costs, and a 10% contingency, how much startup capital is needed?

• A. $60,000
• B. $52,000
• C. $63,800
• D. $75,000

Answer: (C)

When planning startup capital, you combine the ongoing operating costs you’ll need during the initial runway with any one-time fees, then add a contingency to cover unexpected issues. Here, the monthly operating costs are the lease plus materials: 4,000 + 15,000 = 19,000 per month. If you assume a three‑month runway before revenue comes in, that base run cost is 19,000 × 3 = 57,000. Add the one-time licensing fee of 1,000, giving a base total of 58,000. To protect against surprises, apply a 10% contingency on that base: 0.10 × 58,000 = 5,800. Add the contingency to the base: 58,000 + 5,800 = 63,800. That’s why 63,800 is the needed startup capital.

When planning startup capital, you combine the ongoing operating costs you’ll need during the initial runway with any one-time fees, then add a contingency to cover unexpected issues. Here, the monthly operating costs are the lease plus materials: 4,000 + 15,000 = 19,000 per month. If you assume a three‑month runway before revenue comes in, that base run cost is 19,000 × 3 = 57,000. Add the one-time licensing fee of 1,000, giving a base total of 58,000. To protect against surprises, apply a 10% contingency on that base: 0.10 × 58,000 = 5,800. Add the contingency to the base: 58,000 + 5,800 = 63,800. That’s why 63,800 is the needed startup capital.