Bootstrapping vs Apply to Accelerator

What exactly do You Need?

There’s more than one way to raise capital, and the very first option starts with self-funding, or know as bootstrapping. Since it’s your own fund without any external capital, you also retain complete control over your company direction. Without investor pressure, you can decide when the right time to scale. Or for other reason: your product couldn’t exist without more capital. It’d better way to try applying to accelerator.

What is Bootstrapping
Bootstrapping is a minimalist business. A term which used in business, referring to the process of using only existing resources such as; personal savings, personal computing equipment, and garage space, to start and grow a company. It literally means starting a business without help from venture capital firms or significant angel investment. It also means plowing back into the business the money earned from customers.

The pros

• You become an entrepreneur aka your own boss. You keep the power of decision-making.
• You don’t have external obligations and expectations from investors.
• You can choose to grow your business at a pace that you want to. Most investors expect you to grow as fast as you damn capable of.
• It forces you to be lean.
• It forces you to focus on revenue right from the start.
• Necessity is the mother of innovation.
• Less time is spent raising money, thus you have more time to focus on your product and customers.
• You capable of choose the right time to raise funding when you’ll likely be in an advantageous position to negotiate better terms.
• It reduces or avoids the dilution of founders’ equity.

The cons

• It can take much longer to grow a company without investment.
• You will likely not be earning any money for quite a while.
• You can easily end up in a lot of debt.

Despite the benefits of bootstrapping your company, you need to consider join accelerator program when the time are come to scale your company. You can get your business funded much faster than on your own due to the network you gain access to; but essentially before you are ready to take any external money you need to know what you are building, who are your clients, how you test your value proposition, how to get your customers on board, what are your challenges as entrepreneur to build a successful business.

What is a Business Accelerator
Business accelerator programs offer start-ups low cost space, business services, talented employees, and contacts who can help find customers and partners in exchange for a small stake. Your time is typically limited to a 3–4 months period, basically intended to jumpstart your business. The cash investment into your business from the accelerator itself is very minimal (e.g., $20,000), but your time in the accelerator should largely improve your chances of raising venture capital from a third party entity on the back end, right after you graduate from the program. Mentorship could be coming from 100 entrepreneurs that are affiliated with the accelerator (many of which are proven CEOs, or investors looking for their next opportunity or simply helping the local startup community).

The pros

• Large network of people that you connect with.
• Getting mentorship and seeking feedback about product market fit.
• Level of credibility in order to attract talent or partnerships.
• Shaping the team.

The cons

• Losing too much equity too soon.
• Lack of synergy or support that matters to your business.
• Distractions from others who are earlier or later in their business maturity.
• Not learning about things that you’d otherwise be forced to on your own.

Conclusion
Deciding on whether or not you should pursue starting up your business via an accelerator largely comes down to your personal confidence in the defensibility of your business model, your execution skills and your fundraising skills. If you have a credible story and your business is nicely progressing on your own meaning bootstrap, you probably unnecessary to join an accelerator programs. But, if you need help fine tuning your business model or revenue model, or maybe a first time CEO wanting to hone your skills from proven peers and entrepreneurs, then this type of mentorship could be perfect for you.

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