mobile App marketing

Bootstrapping vs Venture Capital - The Right Funding Strategy for Your Business

Here, we are discussing major differences between the two most commonly used funding methods in the global investment segment- bootstrapping vs venture capital!

bootstrapping vs venture capital

For aspiring entrepreneurs, planning and arranging funds is one of the most crucial issues that become the hurdle between them and their dreams. Even in the modern world, where angel investors or startup loans have become a common topic, it can be quite difficult to figure out what funding options are the best when it comes to raising money for your business idea. 

In this guide to starting a business, we are discussing some major differences between the top two ways of raising funds for businesses- bootstrap funding vs. venture capital. But before we dive into the differences, let’s understand the concepts of bootstrap vs venture capital separately so it can be easy for you to understand how to get investors for your business ideas.

What do you understand by bootstrapping businesses?

Well, bootstrapping is a simple concept that refers to businesses that do not have an external funding source. The process does not require finding investors for small businesses or large corporations that the founder is planning to start. Instead, founders use their own savings and financial resources to sustain and grow the business. 

To understand the concept of bootstrap startup funding better, let’s dive into its crucial features!

1. Debt-based financing - One of the major differences between bootstrapping vs venture capital is that bootstrap financing is most of the time debt-based. Here, founders have the freedom to sign up for a loan, business credit card, and other such types of debts that can support the business. Moving forward, as the company grows with bootstrap funding, these debts can be paid off.

2. Full control - Another reason why most founders, especially in the initial stages, avoid looking for investors for small businesses is the control over business operations that the founder has. Bootstrapping finances do not require any interference from any outside parties apart from the regulatory bodies. Thus, the founder has entire control over the decision-making process for the business they have founded. 

3. Better personal and professional learning - As bootstrap enables the founders to make decisions themselves, the consequences of the decisions also add to the learning by the business owner. So, the growth of a business supported by bootstrapping finance also reflects the skillset and decision-making capacity of the business owner and attracts more investors.

4. Better focus - Instead of worrying about the sources of venture capital investments, the founder can simply remain focused on making business decisions to grow the business. It saves time, money, and efforts of the founder that are put into trying to convince investors.

What is venture capital funding?

To put the concept of VC funding in simple terms, the funding is done by VC businesses or investors who have the ability to afford losses. The reason behind this is that venture capital investments are done into startups or small businesses with huge growth potential. But, these venture capital startups also offer a high risk of loss. Thus, only a handful of investors are allowed to make this one of the most popular types of funding for startups. 

Now, these venture capital startups are actively guided by venture capitalists who invest in the organization. From offering guidance to joining the organization as a board member, these investors actively involve themselves in the operational processes of the company that has signed up for the venture capital funds. Some other terms that are used to address this method of raising funds for businesses are seed funding for startups, early-stage startup investing, venture capital startups, etc.

Let’s have a look at some crucial features of VC funding to understand the venture capital industry better as well!

vc funding

1. High returns but high risks - The very basic nature of seed funding for startups is that these investments are done with the intention of receiving high returns. However, the venture capital industry also knows that companies that they are investing in also have a great potential to offer risks on investments.

2. Involvement in decision-making - VC businesses also involve themselves in the decision-making process of the startup or business venture they invest in. In short, by signing up for VC funding, businesses also might have a source that could guide them better towards growth.

3. Regular returns - These types of funding for startups are chargeable, and the annual costs of such venture capital investments entirely depend on conditions. Some investors charge an annual fee on the seed funding for startups that they have made. However, some investors might also agree with sharing a certain percentage of profit made during each financial year.

4. Long-term investments - Compared to bootstrapping businesses, venture capital funding is done with a long-term vision. These investors look forward to growing the business they invested in and earning money through equities, fees, etc, for a long time in the future. 

What should you pick from bootstrapping vs venture capital?

Well, in the race between bootstrap vs funding from venture capital, the decision to pick one option is entirely up to your requirements and preferences. Here are a few reasons that can help you in picking bootstrapping or venture capital funding.

bootstrapping venture capital

Wrapping Up

So, to put it simply, bootstrapping or venture capital funding, both have their own benefits. However, depending on the requirements of your business, these benefits might influence your decision. For instance, plenty of developers investing in mobile apps are focused on bootstrapping during the initial days of launching the app and building a company. Mailchimp, GitHub, Shutterstock, and Ipsy are some of the commonly known examples of bootstrapped startups that you might have heard about quite a lot.

Lastly, we hope that our take on the discussion of bootstrap funding vs VC funding has been useful for your business aspirations. We recommend that you should explore more of our in-depth blogs on MobileAppDaily to understand different segments of markets better. You can read about blockchain startups, tech trends, and more.

Aparna <span>Growth Strategist</span>
Written By
Aparna Growth Strategist

Aparna is a growth specialist with handsful knowledge in business development. She values marketing as key a driver for sales, keeping up with the latest in the Mobile App industry. Her getting things done attitude makes her a magnet for the trickiest of tasks. In free times, which are few and far between, you can catch up with her at a game of Fussball.

Want To Hire The Best Service Provider?
MobileAppDaily will help you explore the best service providers depending on your vision, budget, project requirements and industry. Get in touch and create a list of best-suited companies for your needs.

Featured Blogs

mobile App marketing

Google News vs Flipboard - An In-depth Comparison to Find Out Which Mobile News App is Better?

4 min read  

The competition among top news apps is quite intense as every news app is trying to optimize itself by delivering news in the fastest possible way. To achieve this goal, some top news delivery apps like Flipboard, Google News, Inshorts, and so on have been continuously optimizing their user interfac

mobile App marketing

Top 5 Benefits of Inventory Management Apps

4 min read  

A company’s inventory is considered as the most valuable asset as it makes the core of any kind of business. In all the inventory-intensive sectors such as manufacturing, retail, food supply, and more, the inputs and final products lay the foundation of their business. A shortfall in inventory

mobile App marketing

How Mobile Marketers Use IoT Apps To Increase Efficiency in 2023

4 min read  

Technology enthusiasts have been talking about the concept of the Internet of Things for years. But, with products like Google Home and Amazon Echo constantly gaining popularity, it’s justified to say that we are closer to an age where products are backed by the power of emerging tec

mobile App marketing

Key Essentials of Email Marketing in Mobile Phone Age

4 min read  

We live in a mobile era where the smartphone has taken up a considerable chunk of the market of tech gadget users, and it has ushered in a new era of mobile marketing.One of the most prioritized issues by marketers today is to get it right at the mobile marketing space. Smartphones have introduc

Featured Interviews


Interview With Coyote Jackson, Director of Product Management, PubNub

MobileAppDaily had a word with Coyote Jackson, Director of Product Management, PubNub. We spoke to him about his journey in the global Data Stream Network and real-time infrastructure-as-a-service company. Learn more about him.

MAD Team 4 min read  

Interview With Laetitia Gazel Anthoine, Founder and CEO, Connecthings

MobileAppDaily had a word with Laetitia Gazel Anthoine, Founder and CEO, Connecthings. We spoke to her about her idea behind Connecthings and thoughts about the company’s services.

MAD Team 4 min read  

Interview With Gregg Temperley, Founder Of ParcelBroker App

MobileAppDaily had a word with Gregg Temperley, Founder. We spoke to him about his idea behind such an excellent app and his whole journey during the development process.

MAD Team 4 min read  

Interview With George Deglin, CEO Of OneSignal

MobileAppDaily had a word with George Deglin, the CEO and co-founder of OneSignal, a leading customer messaging and engagement solution, we learn multiple facets related to customer engagement, personalization, and the future of mobile marketing.

MAD Team 4 min read  
MAD Originals
MAD Originals

Cut to the chase content that’s credible, insightful & actionable.

Get the latest mashup of the App Industry Exclusively Inboxed

  • BOTH
Join our expansive network, build connections and expand your brand presence.