[mpr3]

The word "startup" means you're looking at a company that hasn't found its business model (which can scale) yet - at least that's how I interpret it. Important to clarify this first.

As a startup, money should only be spent on making sure that the product and vision are geared towards solving a problem that a lot of people have. If your product isn't solving a problem, then you can spend more of your cash on trying to figure that out in iterations. If a company is iterating in this customer discovery phase then their burn rate should be fairly low.

Once you're convinced that your product resonates with your intended customers (i.e. people have paid you, signed up, or some other KPI has sufficient momentum) then you can start to spend to accelerate marketing and sales in order to "fill the sales funnel". This spending is usually through hires, paid clicks, other advertising and PR.

Spending to accelerate marketing and sales prior to ensuring that your product solves an important problem for a lot of people is a great way to blow through your $1m or more.

In summary, great founders spend their seed money making sure that they have their product aligned with a bit/important problem, then once that is found they spend to accelerate marketing and sales.

[jimmmylost]

[Repeat] We assume that your are a web developer, you have an idea and have it implemented. you sell or are not! do you really need hundreds of thousands of dollars?

[mpr3]

What this usually gets used for is hiring sales staff in advance of having the revenue that allows it. Acceleration is really the key thing that this capital is looking to accomplish (in theory).