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What is bootstrapping? 

Definition: Bootstrapping is a term that refers to starting a business with no external resources like venture capital and investments. Bootstrapped businesses start with minimal resources like the founder’s personal savings.

Bootstrapping is a common strategy for startups early-stage startups because it allows the founders to retain full control over the company. 

This is a common approach among first-time entrepreneurs because they often lack the skill and knowledge to build sustainable business plans and attract investors. At the same time, experienced founders with huge personal savings can opt for this approach in order to remain completely in charge of the startup’s growth and direction.

However, limited capital and a lack of diverse, expert experience can hinder or slow down a startup’s growth. 

Example of bootstrapping

Lemlist is a company that provides cold email outreach SaaS for sales and marketing teams, and it was founded without outside investment. The founders relied on personal savings and revenue generated from early customers to fund growth and development. 

By bootstrapping, Lemlist was able to build a strong and sustainable business model and retain complete control over the company's direction and vision.

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Article FAQs

Why is it called bootstrapping?
The term bootstrapping comes from the phrase "pull oneself up by one's bootstraps," which refers to the idea of lifting oneself to a higher level by one's own efforts, without external help.
What is the opposite of bootstrapping?
The opposite of bootstrapping is "venture capital funding" or "outside investment." This is the process of raising capital from venture capital firms in exchange for a portion of the equity in the company. Companies seek outside investments to speed up growth by taking advantage of the resources and expertise of investors.

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