Bootstrapping a business isn’t a new fundraising method for startups, but it is a growing trend.
“Venture capitalists are a lot more disciplined with how they’re investing, so the current environment hasn’t been as attractive to fundraise early on,” said Fernanda Baker, Executive Director in Startup Banking at J.P. Morgan. “It’s pushing founders to bootstrap for longer.”
Baker and DeMarcus Williams, Managing Director of Startup Banking at J.P. Morgan, offer tips for founders looking to bootstrap a startup.
Bootstrapping is the process of starting and growing a company without outside investment, instead using personal finances or operating revenues of the new company.
This self-funding method works well for founders in industries that don’t require extensive inventory or significant upfront capital, such as service-based businesses, niche SaaS and micro-SaaS companies, and content creation.
Bootstrapping also appeals to successful serial entrepreneurs, who can use profits from previous successful ventures to fund a new startup.
Successful bootstrapped companies can provide founders with several key benefits:
Our dedicated Startup Banking team can help you find the right solutions for your business.
Bootstrapping also presents several potential challenges:
Before reaching Series A, founders can use a range of funding approaches—from pure self-funding to raising multiple seed rounds.
“For most founders who aren’t independently wealthy, raising some institutional capital early on is essential for scaling quickly and establishing a competitive edge,” Williams said. “Seed strapping offers a compelling path for early-stage founders to achieve meaningful revenue while retaining control.”
Seed strapping is a startup funding strategy where a company raises a single round of seed funding, then focuses on building a sustainable, positive cash flow business. The intent is to balance the advantages of outside capital with minimal equity dilution, empowering founders to maintain long-term ownership.
Seed strapping offers several benefits.
“By pursuing a seed-strapping strategy, founders can safeguard their equity because they’re not subjected to continuous rounds of fundraising and ongoing dilution,” Williams said.
“Startups that follow a seed-strapping strategy often enjoy enhanced operational flexibility in their growth journey. While partnering with later-stage investors can accelerate scale and offer invaluable guidance, it may also come with more structured expectations for returns and defined timelines for growth.”
A growing number of AI solutions, such as coding assistants and sales automation tools, are making seed strapping a viable, attractive option for founders. “These solutions will only become more sophisticated in the years ahead,” Williams said.
Common mistakes for bootstrapped businesses include overestimating runway, neglecting marketing, and failing to establish growth milestones or validate pricing early. To avoid these pitfalls and achieve sustainable growth, founders should:
Whether you’re bootstrapping, seed strapping or rapidly scaling your business, we can help take your startup to the next level. Connect with J.P. Morgan Startup Banking today. And visit our Innovation Economy content hub to discover more insights.
JPMorgan Chase Bank, N.A. Member FDIC. Visit jpmorgan.com/commercial-banking/legal-disclaimer for disclosures and disclaimers related to this content.