What do successful startups need so much funding for?

[sk24iam]

I see all these established startups(facebook, linkedin, mint, lendingclub...) that after being developed seek and acquire 100's of millions of dollars in further round seed capital. So my question is, what do they need all of this money for? Is it server costs, R&D, salaries, marketing? Is it something specific? I would think at that level they would be generating enough revenue to cover these costs. Does anyone have any insight on this or related links on the web?

[rogercbryan]

Just a basic print out of someones P/L will show you that the expenses associated with running a business are extensive. When it comes to start-ups I can speak from experience that if you do a calculation of what you think it will take to start a company and then multiply it by 5 you will get the actual 1st year start up expense. Using that equation you can divide their initial start up expenses by 5 to get the numbers into a more relative understanding.

Larger organizations tend to spend a lot more on infrastructure and marketing. They also have to plan for 1-2 years of salaries in the initial funding stage. All of my companies are small so I can not say what the expected break even time from for larger companies is. When I do my business planning I never start a company if it is not going to be operationally break even after 12 months.