We’ve already shared our thoughts on what bootstrapping means, but when I read this piece on bootstrapping I couldn’t help but share since I think it’s pretty much on:
“When you decide to bootstrap, you commit to fund primary development and growth through internal cash flow from real-life customers. You — the founder — and a limited number of early employees may forgo paychecks for quite some time to make this work. But to keep that strategy to a minimum, it’s common for bootstrapping companies to turn to consulting engagements, non-recurring engineering contracts, value-added reseller agreements and projected supplier contracts. In short, “moonlighting.” These funds go toward initial growth and expansion until the company can stand on its own two feet.”
Well said. I would also add that, at least in our observation, a significant percentage (i think the majority) of companies that are funded by VCs today would be better off as bootstraps. There’s a paragraph at the end of the article describing how some companies can’t take the bootstrap path. This is true of course. But there should also be a paragraph describing the startups that shouldn’t take the VC path. I believe when a company that can bootstrap, takes VC, it can warp their values, and ultimately may lower their chances at success.
I think we’re in a world right now where bootstrapping is the exception (in our industry), and VC is the norm. I think that should be inverted.