ceo leaning on desk - bootstrapping your company image

4 Tips on Bootstrapping Your Company

What does it mean to bootstrap your startup?

When first starting your company, there aren’t many funding options available to you. You’re way too early for banks, and angel investors typically want to see at least an MVP before making a decision. If you’re able to get a venture firm interested, you would have to give up a significant portion of equity, and you’re likely to get a much better valuation if you wait until your company is larger and already selling.

Additionally, revenue-based financing and venture debt isn’t an option yet, since you’re pre-revenue. The best choice at such an early stage is to bootstrap your company for as long as possible. That way, you don’t have any loan or debt obligations, nor have you already diluted yourself.

1. Hold off on giving up your day job

While it’s a good idea to eventually go all-in on your startup idea, it doesn’t have to be day 1. Use your day job to build up your savings while you validate your product idea and test the market. Once you’ve gained confidence in your idea, you can use your savings as a sort of runway, allowing you to focus on your product and bootstrap with less stress.

2. Limit your burn

Keep expenses as low as possible, especially if you aren’t able to get outside funding quite yet. This means holding off on scaling your company or hiring new employees until you’re absolutely sure you’re ready. Additionally, keep an eye on unnecessary personal expenses. Limiting your salary and ‘fun’ purchases will add up more than you think.

3. Don’t outsource what you can do yourself

As a founder and first employee, you’re going to have to do a lot of things that don’t scale. And these jobs may not always be glamorous, but they help keep expenses low. Additionally, it’ll require you to learn a lot of new skills. Outsourcing on skills you don’t have is a good strategy when your company starts growing, but when cash is limited, if you don’t know how to do something, learn it.

4. Design a business model that generates cash

As you’re developing your business model, keep an eye on how quickly you can begin bringing in revenue. No cash inflow can end your company before you even get started.

Back to the Growth Center

Related Posts

Debt, Equity, or Both? A Cost of Capital Framework for Founders

Every founder eventually asks some version of the same question: should I raise equity, take on debt, or do both? Most founders answer it by comparing which instrument looks cheaper on paper. That is the wrong question. The real question is whether the return you can generate on a dollar justifies what that dollar actually costs you. This came up in a recent webinar, From Capital Planning to Capital Execution,

How Long Does Fundraising Take? Where the Six to Twelve Months Actually Goes

Ask a founder how long their raise will take and you will usually hear one month, maybe two, maybe three. Ask again four months in and the answer has changed. Carlos Antequera, our co-founder and CEO, names the pattern this way: because founders are optimistic by nature, they tend to think it happens in the next month, two, three. On average, most fundraising processes run six to twelve months. That

Revenue-Based Financing Eligibility and Sizing for B2B SaaS Companies ($5M+ ARR)

A B2B software company above $5 million in ARR clears most providers’ minimums comfortably, so the live questions are what underwriting actually examines and how much capital that revenue supports. This guide covers the underwriting basis, the published eligibility criteria, the amount available at this revenue band, and how existing debt affects capacity. Novel Capital sizes Upfront Capital to 15% to 20% of gross profit margin, from $100,000 to $2

Financing a B2B SaaS Company Through an Exit Process ($5M+ ARR)

A company above $5 million in ARR planning toward a sale needs capital that behaves predictably across a timeline nobody can forecast, and the terms that matter most are the ones that only come up in a transaction. This guide covers what happens to a facility if the company is acquired, whether draws stay available once a process is underway, how a facility compares with an equity bridge, and how

Related Posts