Bootstrapping vs. Fundraising?

SDS 040: Bootstrapping vs. Fundraising?

Hey! thank you for reading issue 040 of Startup Definition Sunday (SDS). You can read past issues here.

SDS is the only newsletter that is redefining support for Africa's emerging founders. Every other Sunday, we cut through the fundraising and ecosystem noise to bring actionable insights to 1K+ emerging founders.

(P.S. I'll never sell your information, ever)

If you’d like to sponsor future issues of SDS, here’s a simple way to do it.

Subscribers-only Cash Prize

Greetings from Nairobi! I'm looking at a beautiful bouquet of flowers and thinking of you.

Thank you for being a loyal reader every two weeks. To show my appreciation, I'm starting a biweekly game just for subscribers.

Can you guess the exact time I'm writing today's issue?

Here are the rules:

  1. The person with the closest guess wins $5 from me.

  2. If no one guesses correctly by the next issue, the prize increases by $5, until someone gets it right.

In the last issue, no one managed to guess within 30 minutes of the correct time. So, the prize money is now $30.

Take a guess at what time of day I'm writing this issue. Reply to this email with your guess until 11:59pm on June 15th. Good luck!

The most enjoyable part of my job is talking with founders.

Many founders in the early stages of their startups are finding that investors are less interested and it takes longer to get funding.

Because of this, these founders are asking: Should we use our own money to grow (bootstrapping) or get money from investors (fundraising)?

This choice can shape your business, so it's important to think carefully about the pros and cons before deciding.

Bootstrapping: Bootstrapping means using your own money or the money your business makes to grow. By doing this, you keep full control over your business and don't have to give away any part of it. This way, you can be flexible and make changes without worrying about investors. Plus, it helps you build a strong business from the start. Look at Mailchimp, an email marketing platform that started with bootstrapping and became very successful. But, there are challenges. Without extra money, growing your business might be slower. You might miss out on growth chances and find it hard to hire top talent without the funds to compete.

Fundraising: Fundraising can give you the money you need to grow quickly. By getting investment, you gain access to the knowledge and connections of investors. This can help you attract top talent, as people might be more interested in joining a well-funded startup. However, raising money means giving up some control and part of your business. Investors will have expectations and might pressure you to meet certain goals. Additionally, the fundraising process can also take a lot of time, taking your focus away from developing your product and serving customers.

So, which is best?: Well, there is no one-size-fits-all answer. It depends on your business, your goals, and what you prefer. Some founders use a mix of both, raising funds at certain stages and bootstrapping at others. If you are thinking about bootstrapping, you can try incremental fundraising. This means getting smaller amounts of money from customers, partners, or other sources. This way, you can keep control while still getting some extra funds.

My two pesewas:

Whether you choose bootstrapping or fundraising, make sure it fits your vision and goals. Think about your resources, how much risk you can handle, and how much you want to grow. Talk to mentors or advisors who have done this before. Trust your instincts and make the choice that feels right for you and your startup.

If you or someone you know should be receiving 2024 issues in their inbox, consider joining SDS so you don't miss exclusive sections in future editions.

If you only read one thing this week, read this...

Why is it worth your time? This article guide offers crucial insights on adaptability, self-awareness, talent acquisition, and strategic thinking essential for any founder aiming for operational excellence.

That's all for today. As always, thank you for being an engaged reader.

I'll catch up with you in two weeks with more actionable insights.


Whenever you are ready, there are 3 ways I can help you:

  1. Review your deck for investment: It takes less than 5 minutes to complete.

  2. Improve your investor updates using these two templates.

  3. Promote your brand to 1000+ early-stage and aspiring founders by sponsoring this newsletter.


or to participate.