Bootstrapping is an organic process of growing a business by gaining customers who provide the funding needed to start-up and grow. Venture capital is the opposite, where the company gets initial funding from investors who believe in one’s idea. Bootstrapping is effective for companies operating in established and existing markets, with lower entry barriers. Where venture capital is more suited when companies need to develop whole new markets, there are no customers ready to finance it. A hybrid approach also works in newly formed markets, where a company can gain initial traction through bootstrapping and later on get funding allocated for growth.
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