September 6, 2016 by Fred Haney
Why should I “bootstrap” my company?
“Bootstrapping” is running your company on little or no cash until either you are able to raise capital on attractive terms or you need money to expand. There are at least three reasons to “bootstrap.”
- You may not be able to raise money so you might as well make as much progress as possible.
- The more progress you can make, the better your chances of getting capital.
- The more progress you can make the higher your valuation is likely to be.
- The longer you bootstrap, the more likely you are to attract more seasoned players to your team.
It’s very difficult for one or two founders with a business plan to raise capital. But if they can build a small team, create a proof of concept, build a product and get a customer, their chances of getting funding increase dramatically.
Not all companies can bootstrap. Some will need capital to get off the launch pad, but most companies — if they get creative — can find ways to make lots of progress without much capital.