When you think of today's start-up ecosystem, raising funds from investors seems almost like conventional wisdom for someone stepping into the entrepreneurial side. With every passing day, we encounter more and more success stories of startups that are on the course of scaling and becoming a sustainable business - after having taken off with the help of investor funding.
On the other end of this spectrum are businesses and founders who get about building a product or business, and scale it entirely from their own kitchen. They plough in their own capital, and put every earned dollar back into the operating machinery, for some time at least.
Right from a bird eye's view to an insider's point of view, bootstrapping has been known to be a more difficult but dedicated route of treading on the entrepreneurship path. Having said that, this in no way undermines the businesses that go seeking investments elsewhere.
Both these cases are fueled by the thought of creating a product that delights users with the quintessential startup ingredients of grit and agility. From another point of view, these factors are the also strongest litmus tests for both the funded and the bootstrapped startups. In short, only the focused ones will make the grade, or be successful.
Given that a lot goes into building something from scratch, both kinds of startups are bound to feel empowered and independent. Bootstrapping, however, rewards the founders with a certain amplified sense of freedom - right from ownership of the product to the degree of creativity associated with every single thought around the development of the product. In such a scenario, the founders, and the team, are able to channelize their shared vision, passion, and thoughts into building a user-centric product much more vigorously, and are the fortune makers themselves, in the truest sense.
Prima facie, the most exciting thing about bootstrapping is the complete control on incoming revenue. However, I can vouch that these earlier rewards I mentioned far supersede the financial returns. The greatest joy comes from the sense of freedom in pushing their ideas to completion. Bootstrapping is more likely to bring this kind of absolute joy to the founders.
When it comes to the daily functioning of the business, bootstrapped businesses allow their teams to maximize their potential, since they have the entire creative freedom at their disposal. However, having such an order of things while running a funded startup can be difficult for two reasons: Firstly, once the funding comes in, there is a lot of external stakeholder expectations to be taken care of; and secondly, before fund raising, immense efforts go into attracting investment - which means the founders are working towards making it a fundable business, instead of solving and validating an actual problem that exists for their users. This, definitely, is a trade-off which does not augur well for the development of a valuable product.
Needless to mention, freedom is also associated with a greater sense of responsibility. We know this through various spheres of our life, and it holds true for bootstrapping as well. Freedom that leads to loss of focus on key goals is definitely a red flag.
Young entrepreneurs must make this their thumb rule, and leverage bootstrapping to exercise their independence in order to enjoy their freedom. This means that only they call the shots– be it in creativity, work culture, or size of company.
So, don’t jump at the first opportunity of getting funded. Examine the pros and cons of bootstrapping vs. funding before you launch the next great product or service.
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- Statistical inference
- user-centric product