Bootstrapping is when the founders invest their own money into the company and grow without the support of external funds.
Advantages of Bootstrapping
Many startups find bootstrapping as the best path to growth, especially in the early days of the company. Here are a few advantages of bootstrapping:
- Independence: You won’t fire yourself and you don’t have to answer to anyone.
- Control: When you fund yourself, then no one else can control your business.
- Betting on Yourself: One of the best ways to show your market that you believe in the business is putting your money in first.
- Leanness: Bootstrapping keeps your business lean by not overspending on unnecessary items, as it's tough to spend money you don't have.
Disadvantages of Bootstrapping
However, bootstrapping isn't for everyone, as it can sometimes limit the growth potential of a pre-revenue startup. Here are a few disadvantages of bootstrapping:
- Short-Termism: Funding your company yourself is likely a short-term solution, limiting your runway.
- Cash Shortage: Depending on the type of business you're in and your expertise, bootstrapping may not provide the capital needed to get to through productization or prototyping.