Bootstrapping vs Investor led - what are the key differences when building?

The key differences between investor led and bootstrapping

As a passionate bootstrapper it’s tempting to write about why you should bootstrap as opposed to seek investment. However, what I think is much more useful is to look at the differences required in the actual approach to building. A lot of what you are told as a founder at VC sponsored conferences or investor funded accelerators is not what you need to be thinking about as a bootstrapper. So, what are the key differences in how you build?The first obvious and key difference is that you need cash through the door to put food on the table – you need to live. Firstly this means that you need to ensure you’ve built yourself some runway. The runway is the cash you have out aside to live on while you get yourself up and running. Anyone starting a new business is by definition optimistic and that’s great, but when it comes to runway, I would always recommend working out what you need to survive without any income and then doubling it. You want enough to give yourself a fighting chance but also have enough pressure to make sure you’re working as hard as possible to make it work. No runway, no time limit or worse doubling down when you run out of runway are all bad ideas for any founder.

The lack of external funds means that you don’t have time to try and find product market fit and nor should you. Almost every founder I speak top (although there are exceptions) starts with an idea, fixed or vague, and then ends up doing something similar but slightly different. This is because it takes time to work out what a genuine pain point is that people are willing to pay money for to solve and what the actual solution is. This period of ‘poking around in corners’ is gold. It is also part of the bootstrapping process to ensure that you are getting paid as you are genuinely identifying a product that solves a pain point.

When you start this process of poking around in corners you initially want to work with smaller clients on an almost customised basis.

Small clients are key as they don’t have layers of layers of processes and people. They are also more likely to be receptive. What is crucial is that you are able to get first hand feedback on the work that you are doing. You need to be in direct contact with the end user who is implementing your product to help them solve a problem in real time.  Larger players will be more likely to provide second hand or third hand feedback which is almost useless. You need to get first hand feedback that you can query, discuss, understand and then iterate and respond to.

By working on an almost customised basis as you poke around in corners you are doing two important things. Firstly you are brining money in through the door to feed yourself. Secondly you are starting to go deeper  into your area and understand where there is a gap and the possibility of commonality. If you don’t look for commonality then you just end up ding lots of bespoke work and effectively become a consultancy. The key to commoditising is to find commonality of a pain point. Do not despair if this takes several attempts, misfires  and possibly as long as 18 or even 24 months. This is normal. No-one starts with a product ready to scale.

Poke around in corners, do customised work and look for commonality so you can commoditise.

All the time that you are doing this you are earning money and learning more and more about the area you are building your product in. You are being paid to find a problem  that is a pain point and needs a solution. There is nothing worse than a solution looking for a problem to fix. You are effectively being paid to find product market fit but in a way that is much more likely to guarantee success

The next difference is where to focus to grow. Investors will always tell you to drive new business and focus on winning new logos. This sounds exciting and is tempting for any founder once they start get a taste of success. Do not do this. Instead focus on customer service and providing a great UX to the few clients that you’ve got. No product when it’s first launched is perfect and you need to ensure that your product continues to develop and evolve and meet the changing needs of your customer. If you don’t then when you come to renew your clients there is a chance that your product will no longer be needed.

As a bootstrapper cash is king. The most important focus is to build a renewable and sustainable base of business.  This is the bedrock from which you can grow. Stabilising this and ensuring that you can rely on at least 75% of it to come in the following year as well as evolving your product to improve it and make it stickier is time well spent.

As a bootstrap founder you have to sell yourself. Personally, I think all founders  should sell anyway but as a bootstrapper this is crucial even if you are by training a product person. Understanding what your clients think, what the gaps or deficiencies are with the product and how to then fine tune the value position accordingly,  are all  activities you must be directly involved in.

If you’ve never sold before then you need to learn and fast or you can rely on co-founders. This is another difference. As a founder with investment you can, if you want be, a solo founder. The stress levels will be insane but you can use the investment to plug key skills gaps. The risk is that your key hires don’t work out but as a bootstrapper its unlikely you can afford to do this. If you can persuade people to come on board and work for free while you get it up and running then great but co-founders are almost a must have when you’re bootstrapping.

As well as having complementary skills that plug the gaps you have, they provide a counter point in decision making and most importantly are in the thick of it with you. This is gold. However, understanding your partner, family and friends may be they will not really understand what you’re ging through. Having a co-founder to share this with significantly improves your mental health and resilience

This is the tip of the iceberg and there are many other differences and nuances to how you bootstrap to build.  If you want to learn more about any of the above then check out and pre-order my new book,  Bootstrap Confidential, launching this Saturday 😊

Bootstrap Confidential: Building from Bedroom to Boardroom Without Investors eBook : Green, Charles: Amazon.co.uk: Books