Bootstrapping Basics
Entrepreneurs Need To Know
By Ellisa Brenneman (c) 2009
Over the last five years approximately 600,000 entrepreneurs pitched first tier venture capital firms in North America and about 15,000 received funding. Your chances of getting funded are 2.5%. This is a fact. Many of those that were funded became quite wealthy and many more failed. Venture capital firms are looking for home runs not base hits.
To begin, let’s say you’re having difficulties raising capital for one of a multitude of reasons. You lack an experienced management team with a track record of prior success, your product is still in development, the service you’ve created hasn’t been market tested and you still haven’t refined the sales process. Or, your company may simply not be a “VC deal” or a “home run”, that is, something that will go public or be acquired for a bazillion dollars. Finally, your organization may be a non-profit with a cause like the environment or autism. Does this mean you should give up? Not at all.
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I could build a case that too much money is worse than too little for most organizations, not that I wouldn’t want to buy a NBA franchise one day to emulate Mark Cuban. Until that day comes, the key to success is bootstrapping. Bootstrapping refers to a group of metaphors that share a common meaning, a self-sustaining process that proceeds without external help.
The term is often attributed to Rudolf Erich Raspe’s story The Surprising Adventures of Baron Munchausen, where the main character pulls himself out of a swamp, though it’s disputed whether it was done by his hair or by his bootstraps. Regardless bootstrapping sounds a lot more businesslike and appealing than hairstrapping. What follows is some practical advice for bootstrapping a start-up or small business.
