Bootstrapping is the situation in which many entrepreneurs are, when they start a business from their private funds, without calling on external support, and from the income generated by the activity of the company. This situation is a fairly common situation that occurs all over the world.
Bootstrapping is also a method of calculating a zero-coupon yield curve used by fund managers and financial market professionals. It allows, from a starting date and over a given duration, to calculate the actuarial rate that a bond or swap with a 0% coupon would have.
The entrepreneur(s) who start a business with little or no assets, relying on equity, equity capital, developing short-term operations incorporating little inventory and betting on quick cash inflows are bootstrapping. This is quite common in the consulting and business services world.
This is in contrast to the pre-launch fundraising of companies that have significant investment needs to start their business.
The advantage of bootstrapping is that the entrepreneur can retain control over all aspects of the business. The disadvantage is that the business can quickly run out of reserves to fund growth and working capital.
There are plenty of examples of businesses that have started with bootstrapping.
Another advantage of bootstrapping is that there is nothing to prevent the entrepreneur, once the business has started, from calling on other investors of his choice.
