Startups are super exciting, but figuring out how to fund it can be the opposite. A lot of startups are initially funded by the creators own resources, at least for a while anyway. This process is called "bootstrapping". Yes you should be thinking about investors for the future, but at the start you might have to think about how you can fund and keep your baby running on your own. In this article I'll discuss several crucial strategies on how to bootstrap your startup.
What is “Bootstrapping”?
(Img Source: Two4Africa)
Bootstrapping, which originates from the famous phrase “to pull oneself up by one’s own bootstraps”, refers to the process of using one’s own finances, grit, and resourcefulness to build and grow a new company. Bootstrapping is the opposite of creating a business by accepting significant outside funding from venture capitalists (VCs) and/or Angel investors.
Businessdictionary.com provides a more elaborate definition of bootstrapping:
“[Bootstrapping refers to] [b]uilding a business out of very little or virtually nothing. Bootstrappers rely…on personal income and savings, ‘sweat equity’, lowest possible operating costs, fast inventory turnaround, and [sometimes] a cash-only approach to selling. … Most of [the] world’s startups still follow this road [to growth,] either because there is no alternative [available], or because of the unmatched control and independence it offers [as compared to raising funding from external investors]”.
A number of the most successful tech companies of the 20th and 21st centuries were initially bootstrapped by their founders, including Apple, AppSumo, Craigslist, Facebook, Hewlett-Packard, MailChimp, Microsoft, and Oracle (sources: 1, 2, 3).
Pros and Cons of Bootstrapping