Definition
Bootstrapping
Bootstrapping is building a company using its own revenue and the founders' resources, without raising external equity.
Bootstrapped startups fund growth from sales, founder savings and reinvested profits rather than venture capital. This keeps founders in full control and avoids dilution, but usually means slower growth and tighter resources. Many profitable Indian SaaS and services firms have scaled this way before optionally raising capital later.
Bootstrapping forces discipline on unit economics and cash flow from day one, since there is no investor cushion. It contrasts with the venture-funded model of trading dilution for rapid scale.
Related terms
- Angel InvestorAn angel investor is a wealthy individual who invests their own money in very early-stage startups, usually in exchange for equity or convertible securities.
- Burn RateBurn rate is the speed at which a startup is spending its cash, usually expressed per month.
- Unit EconomicsUnit economics is the analysis of the revenue and costs associated with a single unit — typically one customer or one transaction.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.