Probably should make a distinction between "bootstrapped" and "self-funded" here. Technically, a bootstrapped startup is one that sells a nonexistent product to an early-adopter customer first, and then uses that money to fund development. Or one that starts as a consulting company and then gradually builds out a product based on client needs. Think of Sun, Allegro, 37signals, or FogCreek.
A self-funded company is one that relies on founder savings or wage income to fund initial development, and then finds a customer after they have a product. Think Del.icio.us or Flickr before their angel investments.
Anyway, my last startup (GameClay) was 100% self-funded. If I choose to do another startup instead of taking a job, it'll also be self-funded, but I'll probably focus on identifying paying customers and generating revenue earlier in the process, which would make it closer to a bootstrapped startup.
Great news. Selling isn't actually hard, but it's scary especially as most of us on this site have below par selling skills. Metaphorically, "Knocking on the door" is the hard part.
Interesting, I didn't know that difference between bootstrapped and self-funded. I figured there was a degree of self-funding involved in the early stage of most companies and that you were "bootstrapped" until you were funded or an established business and hence not a "startup" any more...
I guess we would be considered bootstrapped then :)
Given that "bootstrapping" refers to the (physically impossible) process of lifting oneself into the air by pulling on one's boot-straps, I think it has to be restricted to the concept of growing a company using the company's own revenues.
Are you sure about that? If you pull yourself up by your shoelaces, you'll certainly fall on your face; but I think if I tried to pull myself up by my bootstraps, I'd probably end up falling backwards.
My co-founder and I have cut taking a salary from our start-up, which is angel funded. We've both taken (surprisingly well paid) part-time jobs at a local university as mentors to a group of 60 business students on an enterprise module. It's like being back in the garage - recharges the entrepreneurial batteries, keeps the investors happy, and we're meeting future potential employees. HIghly recommended.
I've sometimes wondered whether that should count as a "friends & family" investment. After all, family's putting up the money (in the form of subsidized rent) for the startup.
And does the status change to "self-funded" if you pay your parents rent?
I don't think it qualifies as a "friends & family" investment, since they're not getting stock. But you could certainly call it a friends & family donation. :-)
And does the status change to "self-funded" if you pay your parents rent?
We're between self-funded and bootstrapped - we put up a small initial monetary investment for servers and whatnot, and evangelized the product as we built it.
That being said, we're working on some big grant opportunities right now (the economic turmoil actually works in our favor to some degree), so I suppose we'll be "funded" soon, though without giving up any equity.
Really, there are probably endless ways of mixing and matching these different methods.
A self-funded company is one that relies on founder savings or wage income to fund initial development, and then finds a customer after they have a product. Think Del.icio.us or Flickr before their angel investments.
Anyway, my last startup (GameClay) was 100% self-funded. If I choose to do another startup instead of taking a job, it'll also be self-funded, but I'll probably focus on identifying paying customers and generating revenue earlier in the process, which would make it closer to a bootstrapped startup.