Bootstrapping is the earliest phase of an entrepreneur’s fundraising journey. In fact, it doesn’t usually involve raising external funds at all, because the bootstrapping phase is typically solely self-funded.
It’s the time when you’ll be testing your idea, proving your concept, and might even be creating a very basic prototype. It’s also the time when you may decide to bring somebody else in as a co-founder, someone who shares your vision and complements your skill set. But you don’t have to do that. If you prefer to go it alone and you’ve fine-tuned your offering into an opportunity no prospective investor will want to miss, having a co-founder isn’t necessary to convince investors.
Having a co-founder to help persuade an investor to give you the benefit of the doubt if your pitch isn’t a hundred percent perfect won’t help either. In our experience, you should only invite a co-founder on board when their talent and enthusiasm match your own and they show strengths that will benefit your business and make you a more formidable team. If not, it’s advisable to keep developing your business alone.
What you need to know about bootstrapping in business
Bootstrapping is when an entrepreneur founds and runs their company using only their own personal savings, sweat equity, and operating revenue to make it happen. They’ll usually be doing everything they can to raise enough money to keep their business afloat, including having a second job.
Bootstrapping can be incredibly financially risky and there’s every chance that self-funding won’t provide everything you need to get your product ready to make it big in the market. That’s why it’s imperative to get through the Bootstrapping phase as quickly as possible so you can raise the investment that will allow you to fully commit to your idea.
Having said that, there are some founders who have stayed in the bootstrapping phase for many years and come out the other side with ultra-successful businesses. The e-commerce platform Shopify is one such example.