“Bootstrapping” The term comes from the United States in the 19th century, where to “pull yourself up by your bootstraps” meant to pick yourself up without anyone’s help.
Today, it’s used to refer to entrepreneurs who start and run their business without taking external investment. Bootstrapping comes with benefits to both businesses and their founders. Founders don’t need to dilute their equity or decision-making power, and by necessity are forced towards creative solutions to problems that otherwise would be solved by spending more money. The bootstrapping mindset is one of profits over growth: making, instead of spending money.
A bootstrapped company usually grows through various stages:
1. Beginning Stage: Normally starts with some personal savings, or borrowed or investment money from friends and family, or as a side business – the founder continues to work a day job as well as start the business on the side.
2. Customer-funded Stage: Where money from customers is used to keep the business operating and, eventually, funds growth. Once operating expenses are met, growth will speed up.
3. Credit Stage: Wherein the entrepreneur must focus on the funding of specific activities, such as improving equipment, hiring staff, etc. At this stage, the company takes out loans or may be even find venture capital, for expansion.
few companies who are bootstrapping their way to success in the Indian startup ecosystem are:
37Signals, also known as Basecamp, is a web application company that produces simple, focused software and has become a highly successful business which started as a cash strapped startup. It was founded in 1999 by Jason Fried and David Heinemeier Hansson (or DHH), who have co-written three bestselling books: “Getting Real”, “Rework”, and “Remote.”
TechCrunch, a technology website, was founded in 2005 by a successful serial entrepreneur, Mike Arrington, along with Keith Teare. TechCrunch became the epitome of technology blogs online and basically transformed the space of blogging into great works of journalism. This enormous growth and trust among the cyberspace was achieved by putting out high quality, consistent content by sharing stories about the latest happenings in the tech and entrepreneurship world.
PlentyofFish, one of the largest and most popular dating sites in the world, founded by Markus Frind, became a full-time business in 2004. Until 2008 Frind conducted his business from his apartment, and then eventually acquired a new Vancouver headquarters where he began hiring other employees.