When you’re getting off the ground—or even when you’re hiring your 30th employee—it can sometimes be hard to know if you’re spending too much (or even too little) on the tools to run your business.
Your work might require a lot of travel. Or you might be a startup that requires a lot of server space. Or you might have some other, more specific needs. But it can be hard to benchmark exactly how much you’re spending on everything else that you need to run your business.
We took a look at anonymized Brex usage data to find out roughly how much startups spend on certain major categories segmented by the amount of capital they burn each month. Brex customers are primarily early- to mid-stage tech startups, though we have an increasing number of ecommerce and life sciences companies.
Again, there isn’t one right answer to the way you’re spending your capital. But the more information you have when making key decisions, the better. Let’s dive right into some of the numbers:
Startups burning less than $25,000 per month spend
Startups that are just getting off the ground may have a completely different spending profile than that of your typical startup that’s found product-market fit.
- Ads: $6,530
- Software: $1,857
- Servers: $2,603
- Travel: $2,572
- Events: $1,050
- Rideshare: $479
- Coworking: $1,839
Most Brex customers still invest thousands of dollars in ads each month. So it may be that startups want to start generating awareness for their business right from the get-go, whether that’s for selling a service or building a brand.
Still, this doesn’t necessarily mean that larger companies spend an enormous amount of capital by default. Some startups may simply have lower operational costs. This report only covers seven categories of spending while there can, in reality, be dozens that tackle a whole long tail of requirements.
Startups burning between $25K and $50K per month spend
- Ads: $4,243
- Software: $2,126
- Servers: $3,765
- Travel: $3,765
- Events: $1,119
- Rideshare: $525
- Coworking: $2,042
As startups begin ramping up their spending, their operational costs are probably increasing across the board. More employees means you have to pay for more seats for your software, or you may be paying for new services to ensure you can run your business smoothly. And if you’re out raising money, you might be traveling more to visit investors or firms.
Startups burning between $50K and $100K per month spend
- Ads: $15,034
- Software: $3,001
- Servers: $6,052
- Travel: $3,525
- Events: $1,170
- Rideshare: $631
- Coworking: $2,199
The first trend we see is pretty obvious: while spending is ramping up across the board, advertising spending is growing the fastest. Brex customers that burn between $50,000 and $100,000 spend nearly three times as much as startups that burn less than that on advertising.
And it makes sense! When you’re heavily investing in growth, you’ve probably already found product-market fit and are starting to dial up your customer acquisition. So that means you’re going to be spending more on advertising across a variety of different platforms.
Startups burning between $100K and $250K per month spend
- Ads: $13,935
- Software: $4,155
- Servers: $7,151
- Travel: $7,083
- Events: $1,595
- Rideshare: $666
- Coworking: $4,201
How much does your typical startup toolkit cost?
We get into more detail on the specific shares for each top tool, as well as the typical cost for each of those tools. But here is a broad overview on spending for those tools.
Pre-seed startups typically spend:
CRM $91.38
Telephony $21.39
Design $34.64
Task Management $42.25
We found that the biggest-ticket service among those four categories for pre-seed startups (and seed startups, too) is a CRM service. And realistically, your customer base is going to scale substantially faster than your actual company. So you probably won’t be spending an enormous amount of money on tools like task management or remote conferencing.
Seed startups typically spend
CRM $148.56
Telephony $45.13
Design $53.80
Task Management $101.78
Startup operational needs are only going to grow as they get larger. We can see that Brex customers tend to bulk up their spending on task management services the most. When you’re just a few people in a room, shouting across the table to each other might work to get things done. But as more and more people come on board, and projects get more complex, you’ll need tools that ensure everyone is staying on the same page.
Am I investing the right amount of capital in these services?
Whether you’re on point with these numbers or you’re way off the average spending based on your bracket, you could still be spending exactly what you should be to run your operations.
In the end, your company’s needs are going to be very different than the one down the road. So it’s important to collect as many data points as you can from many different sources—including your colleagues, advisors, investors, and anything else available online. And the spending information presented here is just that: one data point to consider.