Is bootstrapping a good idea for your startup?
Updated: Jun 16, 2021
If you checked back with Micheal Dell, Steve Jobs, Larry Ellison or our very own Radhakishan Damani or Sridhar Vembu they would all tell you to bootstrap till you reach scale. These business leaders fuelled their own enterprise and created profitable sustainable businesses on a global scale. They all launched their idea/product with personal money, built it to a level where the operating expenses were met by paying customers and sought outside funding when there was a need to scale.
Bootstrapping is not for the faint hearted. It’s a hard road to travel and it will test your ideas and abilities to the hilt. But if you’re committed to having complete ownership of your enterprise as well as fully control the direction your vision is taking, then this is your recommended approach. Bootstrapping also allows you to build a legacy which you can look back at and say “I built this”. By keeping you real, it forces you to think profitability which ultimately translates into a sustainable business. You are also forced to get good fast and this ripples out to attracting the kind of talent and culture which is pure play performance. A successful bootstrapped venture will also stay with you for life unlike VC funded enterprises where the average lifetime of the founder tends to be 10 years.
However, if a regular cashflow is a problem for you then bootstrapping could lead to a chokehold within a year, no matter how much your product is being loved by customers. If you are at a stage where your business needs to scale then you may need to look at outside funding. The current scope of work maybe too much to handle solo in which case you will need to include others in your vision – people who could bring sizeable value to your venture like a sales channel, operational efficiency or better visibility.
At the end of the day there is great joy in a bootstrapped venture, just ask the founders of GitHub, who were able to sell their labour of love for $7.5 billion to Microsoft after 10 years. Or the founders of Whatsapp, which sold to Facebook for $19.3 billion. Or DMart who posted a turnover of Rs 6255.93 crores last march or ZOHO who are clocking revenues in the range of Rs 4000 crores.