Professional Documents
Culture Documents
Bootstrapping
Topics
Reference
Simulator
Search Investopedia
Newsletters
Advisor Insights
Bootstrapping
You May Also Like: Learn to trade stocks with virtual money before you risk your own...
What is 'Bootstrapping'
Bootstrapping describes a situation in which an entrepreneur starts a company with little capital,
relying on money other than outside investments. An individual is said to be bootstrapping when he
attempts to found and build a company from personal finances or from the operating revenues of
the new company. Bootstrapping also describes a procedure used to calculate the zero-coupon yield
curve from market figures.
Bootstrapping a company occurs when a business owner starts a company with little to no assets.
This is in contrast to starting a company by first raising capital through angel investors or venture
capital firms. Instead, bootstrapped founders rely on personal savings, sweat equity, lean
operations, quick inventory turnover and a cash runway to become successful. For example, a
bootstrapped company may take preorders for its product, thereby using the funds generated from
the orders to actually build and deliver the product itself. In investment finance, bootstrapping is a
method that builds a spot rate curve for a zero-coupon bond.
Trading Center
This methodology is essentially used to fill in the gaps between yields for Treasury securities or
Treasury coupon strips. For example, since the T-bills offered by the government are not available
for every time period, the bootstrapping method is used to fill in the missing figures to derive the
yield curve.
curve. The bootstrap method uses interpolation to determine the yields for Treasury zerocoupon securities with various maturities.
http://www.investopedia.com/terms/b/bootstrapping.asp
1/3
9/30/2016
Bootstrapping
Topics
Reference
Simulator
Search Investopedia
Put your trading skills to the test with our free Stock Simulator. The ideal platform to get your
Advisor Insights
financial feet wet! Submit trades in a virtual environment before you start risking your own capital.
Click here to sign up today and start interacting with other traders from diverse backgrounds and
experiences, and learn the methods behind their trades to become a better investor.
Newsletters
Bootstrap
Video Definition
Loading the player...
Bootstrap is a situation in which an entrepreneur starts a company with little capital. An individual is
said to be boot strapping when he or she attempts to found and build a company from personal
finances or from the operating revenues of the new company.
Compared to using venture capital,
capital, boot strapping can be beneficial, as the entrepreneur is able to
maintain control over all decisions. On the downside, however, this form of financing may place
unnecessary financial risk on the entrepreneur. Furthermore, boot strapping may not provide
enough investment for the company to become successful at a reasonable rate.
The term itself originates from the phrase "pulling oneself up by one's bootstraps," and
professionals who engage in bootstrapping are known as bootstrappers. These individuals typically
rely on personal savings and the earliest instances of revenue to begin funding their own startup
companies. This contrasts with other entrepreneurial actions, which may include contacting
external investors and other business professionals to begin funding their operations.
Read More +
http://www.investopedia.com/terms/b/bootstrapping.asp
2/3
9/30/2016
Bootstrapping
Topics
Reference
Simulator
Search Investopedia
Newsletters
Advisor Insights
Search Investopedia
DICTIONARY:
CONTENT LIBRARY
Articles
Terms
Stock Simulator
Videos
FXtrader
Guides
Slideshows
FAQs
Calculators
Chart Advisor
Symbol
Advertise With Us
Stock Analysis
HcrI
Contact Us
Careers
Terms Of Use
http://www.investopedia.com/terms/b/bootstrapping.asp
Newsletters
Privacy Policy
3/3