What do these startups need so much money for?
jazer: As so many others have said: yes, good people are expensive. And if you expect to grow to a non-trivial size, hosting/servers/bandwidth are going to cost you.There is also the issue of leverage. If you need $500k, you don't raise $500k, because when you run out and start looking for more money, your negotiating position is very poor. Instead you raise $2M, then start to talk to investors again when you have spent half of it.In my experience marketing is not a significant portion of expenses for a startup.