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Bootstrapping Case Study

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In te r n a ti o n a l

J o u r n a l

o f

M a n a g e me n t

C a s es

BOOTSTRAP FINANCING: FOUR CASE
STUDIES OF TECHNOLOGY COMPANIES
EVA M.TOMORY
UNIVERSITY OF TORONTO, CANADA

Abstract
Innovative businesses, especially in the early stages of their life cycles, often encounter difficulty in obtaining long-term external financing. Their founders tend to seek financing through nontraditional bootstrapping methods to launch their ventures. Bootstrap financing refers to a range of creative ways to acquire resources without relying on borrowing money or raising equity from traditional sources (Freear et al., 1995a).
The paper examines how successful technology entrepreneurs used bootstrap financing: the founders of Microsoft Corporation, Apple Inc., Dell
Inc. and Research in Motion Ltd. The research investigates the elements of bootstrapping as described in Freear et al. (1995a) and in Winborg and Landström (2001), finding that entrepreneurs use bootstrapping extensively during the early stages of growth for both product and business developments. Bootstrapping methods change as the business develops with certain methods used more at the beginning of the life cycle, and different variations used as the business starts to grow. The study also points out that even the most successful technology-based consumer goods businesses relied on bootstrap financing at the early stages of their development. This technique deserves more attention from the scholarly community since it is certain to become more prevalent in the new credit and lending environment.
Key words: Bootstrap financing, technology entrepreneurs

innovation,

Introduction
Entrepreneurs have been around for as long as mankind has been involved in business. Identifying new business possibilities and exploiting them in new ventures for economic gain has always been an important activity in human life. Bootstrap

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