Venture capital (also known as VC) is a type of private equity capital typically provided for early-stage, high-potential, growth companies in the interest of generating a return through an eventual realization event such as an IPO or trade sale of the company. Venture capital investments are generally made in cash in exchange for shares in the invested company – typically those in the high tech or biotech industry. Venture capital firms typically comprise small teams with technology backgrounds (scientists, researchers) or those with business training or deep industry experience who pool their money.
Bootstrapping refers to a self-sustaining process that proceeds without external help. Therefore no VCs are involved and the company is built on it’s own and is the most common way to create a start-up. In fact, the use of private credit card debt is the most known form of bootstrapping. There is considerably more risk for the founders when bootstrapping, but the absence of any other stakeholder gives the founders more freedom to develop the company. Hey, if Dell can do it so can you!
There are different types of bootstrapping:
- Owner financing
- Minimization of the accounts receivable
- Joint utilization
- Delaying payment
- Minimizing inventory
- Subsidy finance
- Personal Debt
SO, our question is this — does the kind of money you receive affect your companyâ€™s trajectory & itâ€™s milestones? What are your thoughts?