Bootstrap vs funding: which side of the fence are you on?

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Hello TIA Community.

Let’s talk about money. Specifically funding for your startup.

Bootstrap

The dictionary defines the term “bootstrap” as a startup with minimal financial resources, or getting oneself or something into or out of a situation using existing resources. Simply put, you fund your own venture, running it in the most lean way possible.

Normally the go-to option for budding entrepreneurs who are beginning to work on their MVP, this gives the founder full control over the startup. This, however poses its own risks such as having to be really careful with each move made. As well as the lack of support from investors and VCs.

Kenneth Low, co-founder of Arcadier, details in this community article:

“Bootstrap forces you to be careful and wise in making decisions since you can’t afford mistakes, a good habit to develop in running a business. Launching a startup with your own money (which is often limited) can mean your business can’t develop as fast as desired.”

Some startups keep the bootstrapping all the way till the later stages, when they require a substantial sum of money to scale.

Funding

Raising funding allows a startup to move and scale quickly. This comes at different stages through a startups route. Funding is not easy to come by too, with the particular investors and VCs having to believe in the product, placing the right about of faith and, of course, money into the startup. Not to mention the connections the startups are able to make through the investors.

Of course, this means that a clear ROI (Return on Investment) is expected and most huge decisions have to be run through the investors before execution. It is therefore important that startups exercise enough care to look for the right investors. You sure wouldn’t want to have an investor denying every single change you’d like to make as a founder would you?

Founder of Roomfilla, Stuart Lansdale mentioned in a community article:

“Their money is at stake so it is decent to give them an update at least once a month. Goes with the territory as they are now ‘part of the team’. Investors may also come with a different interest than you originally thought this is where due diligence on the side of the company is important.”

Let’s discuss