Bootstrapping After Raising Money

Typically, the term bootstrapping in the entrepreneurial world means that the founder(s) used their own money and sweat equity to get a new business off the ground. Only, more and more entrepreneurs are saying that they want to bootstrap the business, even after having raised an angel round (I’ve been guilty of this in the past as well). So, what is it? Bootstrapping or being capital-light?

What the entrepreneurs are trying to say when they call it bootstrapping after raising an angel round is that they want to continue growing the business without any additional outside investment (e.g. be a customer-funded company going forward). Bootstrapping implies being lean and scrappy as resources are limited. An investor-funded company can be lean and scrappy as well, but once a startup raises money it’s often perceived as being flush with cash that will be readily spent.

My proposal is that entrepreneurs that build their company without any outside capital are bootstrapping and ones that only raise angel money are capital-light. Results are what matters, not terminology, but it’s good to be on the same page when talking about financing strategies with entrepreneurs.

What else? What are some more thoughts on bootstrapping after raising money?

One thought on “Bootstrapping After Raising Money

  1. Really like the bootstrapping vs capital-light framework. Capital-light is a nice way to describe startups that have raised funding but not an institutional series-a.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s