Startup Funding Series I: Bootstrapping: Funding Your Startup with Personal Finances

finance for start-up

finance for start-up

You’ve launched your startup ideas and are ready to bring this vision into long-term success.

But your startup requires funding, especially as you are looking to grow it in its early development stages.

In this scenario, we will look at funding your startup with personal finances, otherwise known as bootstrapping. Bootstrapping refers to creating a new business without the use of external funds, one of the great advantages being that it allows for greater flexibility.

Revenue can be taken from personal savings, low or no interest credit cards, mortgages or lines of credit on your home.

This article is the first in the startup funding series, providing you with the guidelines and resources to help you expand your startup.

RELATED: Funding Sources for Your Startup

Starting with Bootstrapping

Bootstrapping is often one of the first funding methods used by entrepreneurs.

After all, the first investor in your startup is yourself, showing to the world that you have a long-term commitment to your projects and are willing to take risks.

When you believe in the vision of your startup, other investors will be far more likely to trust and invest in your ideas.

The preliminary task is to maintain a strict discipline related to the cash flow.

Advantages of Bootstrapping

Bootstrapping has a number of advantages, including:

  • Maintains equity and ownership of your startup at its early stages.
  • You do not have the added pressure of an investor that is second guessing your strategies and moves.
  • Flexibility with business ideas because there are no external obligations.

Disadvantages of Bootstrapping

It’s important to understand all aspects of bootstrapping when making a decision for self-funding your business.

Disadvantages to bootstrapping can include:

  • While bootstrapping allows for flexibility, you also hold greater risk and responsibility for all the debt incurred, should your startup fail.
  • You may not have enough money to scale the business at a faster rate.
  • Once your funds run out you will need to find external investors.

Putting bootstrapping into practice

There are a few ways that you can begin putting bootstrapping into action.

  1. 1. Find your industry and niche.
  • Focus on a market and industry that you know and love, and market well in that one area.
  1. 2. Working on the startup as a side business.
  • This means that you are using your free time to work on this project, whether it’s after-work hours or over the weekends.
  1. 3. Keeping things in-house.
  • When you are just starting out, keep things in-house for as long as you deem necessary.
  1. 4. Saving up.
  • Setting aside a large chunk of money for your business venture will ensure that you have at least a few months of revenue where you don’t need to worry about the finances.
  1. 5. Build around your budget
  • Build a plan around your budget to ensure that you are not overspending.

Setting yourself up for success

Bootstrapping allows you to be fully in charge of your startup.

Your commitment and responsibility to it will shine through during these early stages, as you build it up towards long-term success.

Learn about our Investor Readiness Program

Here at Altitude Accelerator, we know that building a startup can be difficult. That’s why we created a blog series called #HelpMeStartup designed to clear up some common confusions among first-time startup entrepreneurs. 

Register as a Altitude Accelerator client for free to get access to all our tech-startup focused programming and resources.

On the Blog: Read More about Funding for Startups

Top 5 Things Investors Look For in Startups

What information do investors want to know about your company before investing in it? Here are the top five things investors look for in… Read more

How to Prepare for Your First VC Fundraising

Properly preparing for your first VC meeting will greatly affect your chances of success. There’s more to it than just expressing your vision for the company and… Read more

Breaking Down Your Pitch to Investors

Learn how to break down a pitch into all of the various elements you need to include in order to get investors on your side… Read more

Recent Posts