Bootstrapping Before Going for Venture Capital

2016_1_12-small-am-venture-capital-vs-bootstrapping-how-does-the-difference-play-outBefore even thinking about going for venture capital, the first thing you want to consider is bootstrapping. Bootstrapping in business means that you are starting your business on a shoestring or a very limited budget. It means you have become astute at being able to stretch your resources not only in your finances but in the other components of your business.

While bootstrapping is most commonly done in a business start up, it doesn’t necessarily mean that it is only applicable to that. It can be something that is carried out at any stage of the business growth. For those companies that are looking to expand and are wanting venture capital to do this they are much more successful if they include some bootstrapping prior to doing this. Not only will this show your venture capitalists that you have the ability to be frugal with what money you do have on hand, it will also teach you a valuable lesson in handling the money that you will receive through your venture capital dealings.

All too often it is easy to misuse the money that comes from venture capitalists. Once you have set a pattern for frugal spending with your business it is much easier to stretch the dollars that you are going to be getting. The whole concept that you are going to have to prove to these venture capital companies is that you were able to develop your product, and you have proven that you have a good target market that is actively using what it is you are offering. The other thing that you’re going to need to keep in mind is the amount that you are asking for because you are going to have to account for the use of every penny of it, and show your investors that it is needed and is going to be productive.