It’s always a tough choice to make. Whether to opt for bootstrapping or raise a fund for the startup, right? This question is mainly asked by every entrepreneur who has either thought of introducing a new business or has already started one.
Choosing between the two options depends on numerous distinctive things such as:
Here’s an overview of both the options which will clarify the overall concept making it easier for you to make a decision.
Bootstrapping means financing your business with your savings and money. Rather than taking loans or any kind of external funding, this concept revolves around investing your own money in your startup business. The bootstrapped ventures give you more freedom to deciding for your startup. Also, there is not an investor who would micromanage and tell you what they think about your business. The emphasis is more towards a single goal since there’ll be no meddling or intrusion from the shareholders who typically have contradictory visions and perspectives.
If you are opting for a bootstrapping start-up then the most effective model to begin your business with is the lean business model. Unless you are a billionaire, you need to hustle and be super lean on how you run your business when you are independently wealthy. It is close to impossible in San Francisco to bootstrap unless you are super lean and hustle super hard.
Pros of Bootstrapping:
On the other hand are the funded ventures which include the external funding by the capitalists or the venture capital firm, which in exchange for the investment they’ve done demand for equity in the business. Venture funding gives financial freedom which makes it easier for you to pursue different business interests. Not only this, but this also brings more people towards your business with different perspectives, ideas, backgrounds, and expertise giving you everything you need to expand and progress your business.
Capital is mandatory to scale up the business rapidly. It is important to pull that trigger at the right time. For this, you have to start the educational process and meetings beforehand to ensure that you are going the right direction with your business. Moreover, it is also important to secure good capital funding however it might take a little longer than you think.
Pros of Funded Startup: