There is generally a poor fit between the financing needs of start-up entrepreneurs and the supply of financial capital by external financiers due to information asymmetry and high transaction costs (Winborg and Landström, 2001). Financial bootstrapping may thus play a critical role for entrepreneurs who are unable or reluctant to acquire external sources of capital. Despite its widespread use in practice, research on bootstrapping remains scarce. In this paper we address two questions: Do founders employ a specific bootstrapping strategy or do they simply use it because other sources of financing are not available? And, how do bootstrapping strategies relate to new venture performance?
Turturea, Roxana; Verheul, Ingrid; and Bruining, Hans
"DOES IT PAY TO BE CHEAP? HOW FINANCIAL BOOTSTRAPPING AFFECTS THE PERFORMANCE OF NEW VENTURES (SUMMARY),"
Frontiers of Entrepreneurship Research: Vol. 32
, Article 14.
Available at: https://digitalknowledge.babson.edu/fer/vol32/iss3/14