A bootstrapped company should be able to fund itself without outside investments. "Outside investments" here means from a VC, or anyone's personal accounts. F

A bootstrapped company should be able to fund itself without outside investments. "Outside investments" here means from a VC, or anyone's personal accounts. For example imagine a hypothetical company that made $100k and has one founder and one employee. If the company paid $60k on salary ($30k/each), then it'd have $40k left-over basically. A bootstrapped biz would re-invest that $40k. Next year if it made $150k, it might have more to re-invest. That's bootstrapping. This is also important for tax reasons. If it's always the company's money, no taxes. If the founder takes his $30k salary, pays income taxes/payroll taxes no it, then re-invests it in company, now he's paid taxes and the biz is not better off vs having its own money. Now to be clear – I think most people are fine with a founder putting in a bit of their own cash and still calling it bootstrap. But if it happens month-after-month and the biz is not self-sustainable without it, then it's not bootstrapped. To spell it out a bit more, "bootstrap" comes from the phrase "pull oneself up by their bootstraps." It's originay meant to be an example of something physically impossible, but today in practice what it means is self-sufficient growth.