Bootstrap / Self-funding startup

Bootstrap is a common term in the world of computing: it refers to the fact that the given program automatically loads and executes the instructions. In the startup world, this term is used for self-financing, self-sufficient enterprises that do not require external help.

"Bootstrapping" in the startup world means when an angel investor or early capital investor does not appear when a upon the launch/establishment of a company or in its very at an early stage. In these companies, the founders are able to finance the operation from their existing savings and, if lucky, from the first sales. The term also occurs as a noun: a "bootstrap" is a business that starts without external capital or support.

The origin of the term comes from the early 19th century and refers to the strap on the top of the boots. Without this strap, it was almost impossible to put the boots on. Later, the term "booting" in computing also originated from this word. Nowadays, several self-starting activities are also called this.

Nowadays, more than 80 percent of startups are launched from the personal savings of the founders and close family or friends. Nevertheless, bootstrapping rarely turns into a profitable business quickly. What's more, the revenue for these businesses typically builds up slowly, and a safety net around the business is slowly formed, which would make future construction more predictable.

Just as bootstrap was used as a synonym for the impossible in the past, bootstrap is also considered the more difficult path in the startup world. This is mainly because it puts the full financial responsibility on the entrepreneur. Extremely limited resources can hold back growth, make promotion difficult, and in the worst case, even risk the quality and integrity of the product. 

In fact, in this case, the entrepreneur remains in full control of his own product, service and company. This makes the operation much more flexible and, if necessary, can facilitate an unexpected but necessary change of strategy (pivoting). Another advantage is that investor pitches and presentations, which require a significant amount of time in the life of startups, do not take up the time of the founders, they can build the product with all their attention and energy.

Bootstrapping therefore allows the founders to experiment more, try unusual solutions or wait for the optimal time to enter the market. Of course, regardless of this, a business plan and for validation are still needed. Although there is no pressure from investors, there is no compulsion to act, but the scarcity of liabilities and changes in the market still encourage the founders to develop their business quickly.