Funding vs Bootstrapping

A Guide

So you've been thinking of starting a business? Congratulations! You're probably thinking about the financing side, which is totally normal and reasonable. It's important to know the difference between bootstrapping and getting funding from an investor.


Bootstrapping is building your company and growing a business by financing all of the initial costs out of your own pocket. Bootstrapping = you pay from your own pocket.


Funding is external money from sources including angel investors, venture capital firms, governments and more. Funding = Money in return for equity Or Funding = debt

The Bootstrapped Startup Model

Bootstrapping works better for startups in their very early stages. It gives you the freedom to experiment and learn from your mistakes. But bootstrapping is hard work. You need to be willing to make sacrifices. You may end up having to pay for your own healthcare or other services. And it only works if you have enough money to fund the initial stages.

The Funded Startup Model

Funding is a good option for startups that are at an advanced stage and need capital for growth. It allows you to focus on growing your business and hiring people. It's great for marketing and product development. But your equity may be diluted and you lose your sole control over decision making.

So, Which is better?

If you take funding, you'll have access to a lot more capital and resources. You're going to be able to attract a lot of attention and help from investors, advisors, mentors, and more. Funding is great for growth. But it will cost you in equity and time.

So, Which is better?

If you bootstrap, you'll have less time and money. But you'll have more freedom. You'll likely need to make sacrifices. But you'll gain valuable experience and learn many things along the way. But sometimes, it may not be enough.

Choose wisely

It's important to know what works for your startup. Choose the right approach for your needs.