Startup Lingo: Bootstrapping
Published: October 19, 2022
A lot of startups are generally built and grown through various levels and phases of funding and investment. There are some startups, though, that rely on their own means of financing to develop their product and/or service.
Startups that rely either on the founder’s personal financial assets or the company’s operating revenues are said to be bootstrapping. Investopedia says that bootstrapped startups rely on financial resources like personal savings, sweat equity, lean operations, quick inventory turnover, and a cash runway to keep their companies afloat and eventually become successful.
Bootstrapped startups generally have more control in terms of how they use and where they put their money. However, it cannot be denied that they also experience more financial strain and are put at a bigger risk knowing that their capital is coming from their personal pockets.
The term bootstrapping may have come from the 19th-century saying of “Pull oneself over a fence by one’s bootstraps” – a statement implying impossible action. It may also allude to the 19th-century high top boots that were put on through tugging at the ankle straps. This metaphor mirrors independent action.
Ebay, Apple, CocaCola, and Meta are just some of the big-shot companies that started out as bootstrapped enterprises.
Source: Harvey, Ian. (2021 June 08). Companies that Succeeded With Bootstrapping. Received from: https://www.investopedia.com/articles/investing/082814/companies-succeeded-bootstrapping.asp#toc-successful-bootstrapped-companies