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Bootstraps, Seeds, Angels, Adventurous Capitalists
and Sharks
TEFO MOHAPI (South Africa)
“Concentrate your energies, your thoughts and your capital. The wise man puts all his eggs in
one basket and watches the basket.”
― Andrew Carnegie
The past couple of years have seen what can be said to be a boom in technology start-ups,
technology start-up competitions and funding activity related to technology start-ups.
Amidst all this activity, the bottom line is that these are businesses and they should be run
as such irrespective of the hype around technology start-ups. So let’s look at the various
ways technology start-up entrepreneurs can fund their businesses and the possible
consequences of each method.
Technology Start-up Entrepreneurs need to be aware of the options they have and choose
one that is suitable to their business and future plans.
Bootstraps
boot·strap [adjective] - relying entirely on one’s efforts and resources.
Bootstrapping is probably the most basic way to fund a business, and probably the safest. It
entails a start-up founder using his own cash to fund the business and going forward using
the business’ own cash flows to fund expansion. In this manner the start-up ends up being
self-sustaining although it runs the risk of not expanding when it needs to due to lack of
resources and capital, which is the downside.
The upside, one of a few, is that should the business fail the founder only loses his money
and doesn’t have investors and bankers to repay nor does he lose his reputation with “the
suits” as he lost no one money.
Many technology start-ups hardly even consider bootstrapping because it requires being
resourceful and a lot of hard work and perseverance. Also, with the abundance of