Bootstrap or go for Funding : To do, or not to do
Startups are emerging from everywhere. Inspired by the government’s initiative of Startup India, more and more people are coming up with innovative ideas to be converted into a business model. Among them, some are about the #circular economy and #green startups. However, for startups you generally need investment. So, the main question that arises in the mind of an entrepreneur is, “Should I bootstrap or go for raising funds?” To answer this question, it’s essential to understand the concept of bootstrapping and funding.
“Bootstrapping is when an entrepreneur attempts to create and build a business with his or her own finances and without external funding.” This means that bootstrapped ventures or startups are those where the owners or entrepreneurs raise the capital investment with their personal finances such as personal savings or loans from family/ friends. Bootstrapped ventures have a lot more freedom in decision making allowing an entrepreneur to work towards growing his/her enterprise rather than convincing investors for growth.
In the context of a circular economy or green startup, one has to focus on growth rather than profitability. The scale is a major element while the success of these startups. Being lean helps however funding is kind of essential for the scale required where the startup can become sustainable. Therefore bootstrapping till the level until and unless it is essential to take funds is recommended.
Contrary to bootstrapping, funding is a way to raise funds for your startup against equity /debt from investors, such as angel investors or a venture capital firm, who lookout to invest in innovative ideas and early-stage enterprises.
With external funding, the entrepreneur can raise a sufficient amount of investment for his/her startups which in turn provide him/her with financial backing to accelerate his/her business initiatives to scale the startup.
Not only that, as the investors would like to have a say in your ideas and strategy, so you get access to expert opinion at your bay from the people who have been working in financial planning and fundraising for years. Ideas/tips from such experts may help your business getting a head-start and ensuring financial prudence of your business model.
For a circular economy/green-startup, an entrepreneur must weigh above options very carefully and seek the advice of some quality mentor/marquee investors for the same.
There is enough number of grants and low-interest rate national/international private/sovereign funds available for startups working on the above theme. One must explore and take the call accordingly or you may reach out to us at firstname.lastname@example.org to get help.