Bootstrapped vs. Self-Funded
Bootstrapped and self-funded get used interchangeably, but they're not the same thing. Here's the real difference and why it matters.
In the startup community you’ll hear these two terms used when folks talk about building a product (SaaS, App, etc).
You’ll hear things like …
“I bootstrapped myself to profitability …”
and
“I self funded the app and found product market fit…”
They sound very similar. These two terms have been tossed around interchangeably for years. I remember Rob Walling talking about this often on his podcast Startup’s for the Rest of Us (and he even mentions this exact topic in his book, the SaaS Playbook).
But, let’s quickly unpack it …
What’s the difference between Bootstrapped and Self-Funded?
Bootstrapped is when you invest your personal time, resources and reinvest the revenue back into building a product.
Self-funded is when you’ve used your own funds (savings, credit, income from another business, etc) to fund the development of a product.
That’s it.
The nuance is different, but important. If you don’t have money saved up, a large credit line or another business that can fund the new product you’re working on – you’re likely bootstrapping. This also means your probably doing a lot of the work yourself very early on.
If you’re taking the funds from your savings, credit or from another income source to fund the development of the product you’re working on, then you’re likely self-funding. This also means you’re likely paying others to do the actual work (development/etc).
