Bootstrapping

Funding the company from your own money and from revenue, rather than by selling equity.

Example

You keep contracting two days a week and build the product on the other three, until customer revenue covers your costs.

Important

Bootstrapping is slower but you keep control and 100% of the company. Many founders raise because they assume they must, not because they compared.

Related terms

  • Venture capital (VC) — Professional investors who manage a fund of other people's money and invest it in high-growth startups in exchange for equity.
  • Dilution — When new shares are issued, existing shareholders own a smaller percentage of the company than before.
  • Runway — How many months your company can keep operating before it runs out of money, at its current rate of spending.

Lessons that explain it

  • Should you raise money at all? — Raising is not an achievement, it is a transaction. The first question is whether you need it, and most founders skip it. (12 min)
  • Venture-backed or bootstrapped? — Two completely different ways to fund a company, with different risks, different speeds and different definitions of winning. Most founders never consciously choose. (12 min)
  • Should you start a company at all? — An honest look at what it costs, what it requires, and the good reasons not to. Nobody else is going to ask you this. (10 min)

All 176 terms in the Founder glossary