Definition of Bootstrapping:

  1. A type of business funding that seeks to avoid relying on outside investors. By not relying on outside sources of funding, the business will not have to dilute ownership through issuing equity, and will not rely on outside banks for debt. This type of funding increases the level of risk for the business owner, since the money for the business is coming more or less out of pocket. For example, a movie director might finance a project through credit cards or a second mortgage rather than by obtaining funds from a movie studio. The term derives its meaning from the expression lifting oneself up by ones own bootstraps, referring to raising oneself up by ones own means. Also called bootstrap funding. See also self-financing.

  2. Forecasting beyond one period by relying on the forecasted data for that period itself.

  3. Bootstrapping a company occurs when a business owner starts a company with little to no assets. This is in contrast to starting a company by first raising capital through angel investors or venture capital firms. Instead, bootstrapped founders rely on personal savings, sweat equity, lean operations, quick inventory turnover, and a cash runway to become successful. For example, a bootstrapped company may take preorders for its product, thereby using the funds generated from the orders actually to build and deliver the product itself.

  4. Building a business out of very little or virtually nothing. Boot strappers rely usually on personal income and savings, sweat equity, lowest possible operating costs, fast inventory turnaround, and a cash-only approach to selling. Many of todays largest corporations (such as Apple computer, Clorox Co., Coca Cola, Dell Computer, Hewlett-Packard, Microsoft) began as boot-strapped ventures. Most of worlds startups still follow this road; either because there is no alternative, or because of the unmatched control and independence it offers.

  5. Bootstrapping describes a situation in which an entrepreneur starts a company with little capital, relying on money other than outside investments. An individual is said to be bootstrapping when they attempt to found and build a company from personal finances or the operating revenues of the new company. Bootstrapping also describes a procedure used to calculate the zero-coupon yield curve from market figures.

How to use Bootstrapping in a sentence?

  1. Arthur didnt believe in asking for loans and instead endorsed the value of bootstrapping , believing anyone could build a business from the ground up.
  2. GoPro was a bootstrapped company that eventually went public with a $3 billion valuation.
  3. This form of financing allows the entrepreneur to maintain more control, but it also can increase financial strain.
  4. The bootstrapping of the young start-up was impressive as they grew substantially but struggled in the beginning which makes for a nice heros story.
  5. Bootstrapping is founding and running a company using only personal finances or operating revenue.
  6. It will feel great to know that all of your bootstrapping paid off when your business finally hits it really big.
  7. The term also refers to a method of building the yield curve for certain bonds.

Meaning of Bootstrapping & Bootstrapping Definition