The Impact of Bootstrap Strategies on New Venture Development: A Longitudinal Study

While bootstrap strategies are widely used in entrepreneurial ventures, both scholars and practitioners have presented conflicting views on the relation between these strategies and venture development. This paper empirically investigates the impact of bootstrap strategies used at startup on venture development. For this purpose, we use a longitudinal database comprising data from both questionnaires and financial accounts of 214 new ventures. Findings demonstrate that the impact of bootstrap strategies on venture growth is either non-existent or positive. Specifically, new ventures that use more owner funds, employ more interim personnel, incite customers to pay more quickly and apply for more subsidy programs all exhibit higher growth over time. Moreover, ventures that use the buildings of others create more value compared to ventures that own their buildings, without demonstrating differences in growth. Finally, ventures that use more finance from family and friends do not exhibit differences in growth, but they create consistently less value over time. We discuss the managerial and policy implications of these results and suggest avenues for future research.