It seems that most people believe the only way to fund a start-up is to obtain venture capital. That was never true in the past any more than it is today. Of course, some opportunities require far too much capital for self-funding, but certainly not all. I was fortunate to recognize that bootstrapping my company would give me something that I found very important greater control.
When an outsider makes a large investment in a business, he typically wants a say in the composition of the board, business alliances and combinations, future financing arrangements, and of course, the managers and management of the company. Not only that, he typically wants his money back as fast as possible. Banner Blue had the luxury of building a solid foundation of people and procedures at a pace that suited our talents and market requirements rather than a pace arbitrarily imposed by an outsider trying to quickly recoup his investment. When opportunities presented themselves, we were ready to exploit them.
There is also an inherent disadvantage of raising money it can take an unbelievable amount of time. Although it never seemed like I had enough time, the freedom from raising money and tending to investors gave me much more time to spend on strategic and operational decisions than I would have had otherwise.
Over the years I have learned that a bootstrap has additional advantages as well. First, without outside investors, the entrepreneur gets to keep a much bigger piece of the pie. [My book gives some concrete examples reason enough to purchase a copy now!]
Another advantage of spending one's own money is that it naturally encourages financial discipline. By definition, a bootstrap must have a profit-making business model, and profits provide the freedom for a company to invest in new products as well as the ability to survive a strategic mistake or market downturn.
Sometimes bootstrapping is the only possible business model for a company. As colleges increase the number of classes about entrepreneurship, more and more students desire to start a company the day they graduate. In most cases these budding entrepreneurs are too young or inexperienced to obtain venture capital a bootstrap often becomes the only alternative.
Perhaps the most subtle advantage of a bootstrap comes from the necessity of doing things yourself. You will find areas where you are better than anyone you could hire, or at the very least you will be a better manager of the area when you ultimately delegate it or fulfill it outside your company. Banner Blue experienced this in advertising, and Banner Blue's resourceful and on-time development philosophy exemplified how limited resources created a lean elegance from necessity.