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David  Shelters

David Shelters

David Shelters has been a founder or advisor to tech start-ups for the past twenty years in both America and Asia. He has written extensively on advising tech start-ups. In 2012 David founded Finance for Geeks, his first blog imparting strategic and financial advice to start-ups. Shortly thereafter his first book was published by John Wiley & Sons titled, Start-Up Guide for the Technopreneur. In 2013 David co-founded Thailand Startup Review, a comprehensive blog and reference source covering the Thai start-up community.

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Art of Bootstrapping

Strategy for Start-Ups

Bootstrapping is a comprehensive strategy for founders to reduce dilution of equity, spur innovation, and hasten time to launch. Crafting a bootstrapping plan illuminates a path as close to exit as possible before it is necessary to accept equity dilution and loss of control.

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The Story Behind The Book

The inspiration behind this book is the same as the inspiration behind my first book, Start-Up Guide for the Technopreneur. It is too help founders of tech start-ups reach their full creative potential and reap a fair share of any returns derived from their considerable sacrifices in developing a sustainable business around their innovative product or service. This book also represents a continuation of the first book in that conceiving and executing a bootstrapping strategy requires both thinking from a strategic perspective and utilizing the conceptual tools presented in the first book.

What prompted me to write the Art of Bootstrapping is the strong realization that the start-up landscape has been drastically altered in the past few years resulting in the increased importance of bootstrapping for start-ups. This increased importance can be attributed to the fact that the era of big early-stage venture capital deals is fading away as start-up life cycles have lessened. Thus, there is less margin of error in decision-making, an increased need for efficiency and greater reliance on alternative sources of funding. It has also made me realize that a revised definition of the term “bootstrap” is useful to more accurately perceive bootstrapping as an overall strategy encompassing far more meaning than what it has been associated with in the past. 

A further impulse for me to write this book is a worrisome recent and growing prevailing notion among start-up Founders that every aspect of a start-ups’ existence can be approached scientifically and the need for creative and strategic business thought and planning is no longer necessary. This could not be farther from the truth. Although new processes and methodologies such as Lean and Agile give valuable guidance on how to conduct customer and product development efforts successfully, ultimately fits well within an overall bootstrapping strategy and may serve as a decisive factor on whether the innovation created by a tech start-up is commercially successful it still does not necessarily mean the founders will be able to secure the necessary resources in a timely manner nor eventually enjoy a successful exit in financial terms. As I have argued in my first book the two biggest reasons why tech startups fail is because of either starvation or suffocation. Starvation occurs when the start-up does not have sufficient resources to execute its plans. Suffocation occurs when too much decision-making control is granted to non-founders, particularly during the earlier stages. Devising a bootstrapping strategy is intended to avoid both situations.

The mission of this book is to present an effective framework in which founders can devise a favorable bootstrapping strategy appropriate for their particular start-up given both their current internal and external conditions to acquire the financial, knowledge-based and relational resources they are in urgent need of and under the right terms and at the right time. What follows is an illustration of how bootstrap decision-making is conducted given the different factors effecting each individual decision and the more broad prevailing contexts in which such decisions must be made. Beyond making and executing strategic decisions the identification and pursuit of opportunities that can be pursued to attain the strategic objectives of the business must be carried-out. This requires resourcefulness and artful thinking.

Being a successful entrepreneur requires the mastering of both the scientific and artistic aspects of decision-making for your venture. Indeed creativity is needed to fully apply all of what has been learned and is a perfect partner to the accelerated real learning that can be achieved as a Lean startup. This book intends to focus on the more artistic and opportunistic aspects of decision-making which I will argue can still provide a decisive advantage in the start- up arena.

Overview of the Contents

The book is basically organized into four parts.

Part I - Bootstrapping

In the first two chapters a firm basis is presented to fully understand the points to be made throughout the remainder of the book. In Chapter One we first answer the following questions:

What is Bootstrapping?
Why is Bootstrapping an art?

To answer these questions we expand on the traditional definition of Bootstrapping and re- define it as a strategy and customize the definition to fit the present realities of tech startups. We than describe the attributes required for effective bootstrap thinking to demonstrate the artful attributes associated with bootstrapping cannot be replaced with scientific methodologies and remain a critical factor in the potential success of a startup. A review of the various type of resources critical for a tech startup, what comprises a complete founding team and the various types of bootstrapping aligned with the different types of resources will be given before the chapter concludes with a listing of the general benefits and disadvantages associated with bootstrapping.

In Chapter Two the prevailing contexts in which Bootstrap decision-making must occur and what more specific internal and external factors founders must consider when making bootstrap decisions is presented.

Part II – Bootstrapping for Resources

Chapters Three through Five represent the second part of the book in which we explore the different types of decisions and opportunities that exist to secure the different types of resources presented in the previous chapter. Chapter Three focuses on financial bootstrap decisions and opportunities. Chapters Four and Five will examine knowledge-based and relational bootstrapping decisions and opportunities respectively.

Part III – Bootstrapping Majors

In Part Three each chapter will focus on one of what I have labeled the bootstrapping “majors.” The bootstrapping majors represent the most notable bootstrapping opportunities based on availability and the amble provision of all three types of resources. The bootstrapping majors include co-working spaces, incubators, accelerators, crowd sourcing and strategic partnerships. A chapter will be devoted to each major. In each chapter we will define and present multiple

variations of each major followed by an examination of how each of the three types of vital resource is provided. The potential challenges and risks of each major will then be given followed by illustrative experiences. Each chapter will conclude with a discussion on the factors to be considered in choosing to pursue each major followed by a brief overview of prevailing trends.

Part IV – Bootstrapping & Startup Communities

Chapters 11 and 12 will serve as the fourth and final part of the book. In Chapter 11 the topic is formulating a bootstrapping strategy and articulating this strategy in a bootstrapping plan. The chapter begins with a brief review of the different bootstrapping plan components discussed throughout the book including the “minor” bootstraps introduced in Part II and the “major” bootstraps discussed in Part III. The chapter then proceeds to formulating a bootstrapping strategy before climaxing with the actual construction of a bootstrapping plan.

Chapter 12 will examine the current global proliferation of bootstrapping opportunities, how it can be a measure of the vibrancy of a startup ecosystem and the relationship between the presence of bootstrapping opportunities and the health of the start-up communities in which they exist. To accomplish this we will examine the recent explosive development of the Thai start-up community as an example.

Hopefully this book will help founders of tech start-ups better understand and navigate through the new global startup environment and better understand the importance, relevance, means and benefits of bootstrapping.

Chapter 1: What Is Bootstrapping?

Historically bootstrapping has been a term used to describe the efforts of individuals to overcome a nearly impossible obstacle or to improve oneself through self-sustaining efforts requiring no assistance from others. The saying, “to pull oneself up by one’s bootstraps” has been a common Western expression during the previous two centuries. In modern business language bootstrapping has primarily meant funding a new business without external funding or other forms of outside help and/or funding growth through internal cash flow (revenues).

In the glossary of the first book I authored titled, Start-Up Guide for the Technopreneur, the following simplified definition of Bootstrapping was given:

“Practice of sustaining operations and development without raising external capital.”

Both the conventional definition of bootstrapping and the simplified definition I gave in the preceding book require expansion beyond the avoidance of needing to secure external capital in any discussion concerning bootstrapping and the formulation of a bootstrapping strategy.

By definition an entrepreneurial venture is a business undertaken knowingly without initial resources sufficient enough to achieve its objectives. The resources critical to be acquired by any entrepreneurial venture include financial, knowledge-based and relational resources. Any decision or pursuit through which a start-up tries to acquire any one or a combination of such resources at a cost, in both financial and non-financial terms, less than the cost of securing funding needed to acquire such resources through an equity sale or other traditional financing may be considered a Bootstrap. Efficient financial management, minimizing the amount of investment funds required, reducing your cost of capital or elevating your valuation by mitigating risk, funding your venture with minimal external monetary and non-monetary obligations, cost-effectively acquiring the necessary talent and information and accelerating on learning curves related to customer and product development efforts represent the various means to bootstrap a business.

For high-risk tech start-ups in highly dynamic markets utilizing rapidly advancing technologies the dimension of time, accelerated learning and exposure are critical elements that need to be efficiently mastered to increase the probability of success. Buying time for your start-up venture to acquire all the vital resources is the essence of bootstrapping and often the primary determinant of start-up success. Time is also vital in creating the necessary, oftentimes global, exposure required to initially attract investment capital, eventually execute a commercial launch, sustain growth and ultimately enjoy a lucrative exit. Consequently, the value of bootstrapping extends into the later stages of a start-up as well.

We have all heard the expressions “Time is money” and a “penny saved is a penny earned.” However, in regards to start-ups, “a penny saved is more than a penny earned.” This is true if one considers that a typical successful exit for a start-up is considered 5 to 10x ROI. Thus, a penny of investment money saved may equate to 5 to 10 pennies earned. A start-up has a monthly burn rate it needs to endure before it generates enough revenue to pay its expenses. The longer it takes to generate such sustainable revenues from its innovative product or service the longer the start-up will need to secure funding from other sources. Thus, any actions an entrepreneurial venture can execute that reduces the amount of time and/or expense required for any necessary activity or reach a worthy objective may be deemed a form of bootstrap. Consequently, both relational (social) and knowledge-based resources need to be included in the definition of bootstrapping.

Why is Bootstrapping an art?

According to Wikipedia the study of creative skill, the process of using such creative skill, a product of creativity or the participants’ experience with such creativity can be considered forms of art. However, application of science to create something new does not represent art.

Why is bootstrapping a form of art, not a science?

Bootstrapping calls for creative thinking to identify alternative means to secure much needed resources. Bootstrapping often times cannot be planned and requires founders to be opportunistic. Bootstrap decision-making represents a process of using creative skills to acquire vital resources in a timely manner and this book represents, in part, the study of such creative skills.

Science can be taught. Founders of entrepreneurial ventures all have the capability of learning and applying the scientific aspects of a start-up. Whether this represents composing a business plan, software architecture, selecting distribution channels or negotiating a funding agreement all these skills can and should be acquired to increase the probability of success. However such skills do not provide the differentiation and competitive edge often required for a start-up to be successful. It is often the case that a business opportunity is identified at the same time by several entrepreneurs. The entrepreneurs may follow the same business model, the same processes and employ the same technologies in targeting the same customers, however, the entrepreneur who is most familiar with the subtle behaviors and preferences of the prospective customers’ and the hidden dynamics of a new market possess a valuable foreknowledge giving them a decided advantage. Consequently, bootstrapping is a form of art in that experience often trumps study.

Sun Tzu in his infamous work, The Art of War, asserted that foreknowledge cannot be elicited from the study of past analogies or calculations. It must be made by men who know the enemy situation. (1) This truism holds true for a trail-blazing start-up venturing in a new market with a high-tech innovation whose enemy is not an opposing army or the terrain to be traversed but rather an elusive target market and the unknown disruptive potential of their own innovation. Not being able to primarily rely on history or quantitative analysis implies that the decision- making process is more of an art and that an opportunistic approach is ideal in dealing with prevailing unknowns. Consequently, bootstrapping is both an art and a strategy.

Acquiring such “foreknowledge” or experience permits the formulation of more effective planning which results in greater discipline and flexibility. A combination of discipline and flexibility permits decision-makers of every stripe to be ready to pounce on any opportunities that may arise. This is the acme of skill for both military leaders and founders of start-ups.

The “foreknowledge” required to seize bootstrapping opportunities permits the pursuit of an opportunistic bootstrapping strategy. Identifying and taken advantage of available

bootstrapping opportunities is the means to both shorten the amount of time required and to increase the amount of time one has to secure the vital resources required for a successful start-up venture.

True entrepreneurs are more similar to artists than scientists in temperament and mind set as well. Accepting an experienced corporate executive onto an early-stage founding team may look good on paper. The corporate executive may be well trained on the scientific aspects of your business. He or she may be well-versed in the technologies and software architecture utilized, the best practices to follow, knows how to conduct business planning, make professional presentations and manage projects, etc. However, will this experienced corporate executive possess the appropriate skills and attributes needed to contribute to a successful entrepreneurial venture? Some may as they have unknowingly been entrepreneurs in both mind and spirit previously trapped in the corporate world. Indeed, for a corporate executive to leave a stable well-paid job to join a start-up may be evidence that he or she is an entrepreneur at-heart, has had their epiphany after working in the corporate world as I had, and now willing to assume the inherent risks, sacrifices and potential upside of being an entrepreneur. However, will that former corporate executive be able to apply the very different problem- solving skills and exhibit the thrift and resourcefulness required in a more cash-starved environment? Will this newly minted entrepreneur have the requisite diagnosis abilities and be able to “think-out-of-the-box” as will be demanded in dealing within much more dynamic environments and new markets in which the needs of customers will need to be learned, not found in a downloadable market or research report? In other words, a new market for an entrepreneur is similar to the blank canvas starring in front of a painter. No scientific approach or brushing method is sufficient to create an unforgettable masterpiece or sustainable innovation.

Entrepreneurs are different than artists in one important respect. They do not enjoy the luxury of time to create their masterpiece and a lucrative post-mortem exit is not acceptable. Entrepreneurs will need to bootstrap to buy themselves this precious time. In this way they become artists in manner of thought, the objects they create and the unique bootstrapping attributes they emulate. It is these bootstrapping attributes we will turn our attention to now.

Bootstrapping Attributes

To be effective at bootstrapping the following represent the unique artful abilities and attributes most often associated with entrepreneurs.

Creativity, (“thinking-out-of-the-box”)

I often consider the financial management of a tech start-up to being in a perpetual state of crisis management as the significance of virtually each decision and dimension of time is so critical in the decision-making process. This reduces the amount of time available to formulate a thorough rational consideration of a decision and its associated consequences. Consequently the creative ability to “think-out-of-the-box” is often required and a very valuable attribute possessed by an individual founder or a founding team as a whole.

Artful Diagnosis

To me bootstrapping is an art form because it requires strong diagnostic abilities in the absence of a scientific (textbook) approach that can be universally applied as high-tech ventures are typically operating in highly fluid and dynamic environments offering very few analogous cases that can serve as a meaningful precedent for specific scenarios the decision-makers of a tech entrepreneurial venture will encounter. New markets represent an exploration into a new frontier. The nature and magnitude of problems that lurk ahead are often difficult to conceive, difficult to recognize once they are posed and often require a timely solution. Without precedents as reference the diagnosis skills of founders needs to be uniquely geared to thinking in such unexplored environments. Time is money and the longer it takes to diagnose a problem the more costly it is to resolve or make a “pivot.” Making “pivots,” as we shall see, is an integral part of the life of any high-tech start-up following the precepts of Lean- the predominant methodology for tech start-ups today.

Dilemma Solving

During the life of a start-up many of the crucial decisions the Founders will face involve trade- offs. As we will discover shortly the Wealth vs. Control Dilemma creates such potential trade- offs. Bootstrapping can be considered more of an art, rather than a science, because there is no absolute right answer for such decisions requiring such a tradeoff. The priorities of the founders often is a major factor in determining a particular course of action as well. Maintaining the optimal balance between two inherently conflicting factors is indeed an art that cannot be taught.


The virtue most commonly associated with bootstrapping is thrift. Bootstrapping actions are not only intended to cost-effectively secure a valued resource but also represent how the venture is to be perceived. Bootstrapping is an art because the bootstrapping decisions made by the founders of a start-up convey its nature and aspirations. It is advantageous for a start-up to be able to convey thriftiness as valuable assurance to prospective investors and strategic partners that their contributions and efforts will be efficiently utilized.

The identification of bootstrapping opportunities currently available and the process of bootstrap decision-making is an art requiring conceptual approaches to evaluate such bootstrapping opportunities and validate bootstrapping decisions. In the proceeding chapter we discuss such evaluation processes and tools.


Founders often have to either be instinctive or “discover” via non-traditional means the information required to make optimal decisions or identify opportunities to acquire much needed resources. The markets that start-ups typically target are either new or niche and very likely there exist little, if any, market research reports to reference are other companies to emulate. Resourcefulness is especially important in the fund-raising activities of start-ups as they possess very limited resources to conduct such activities and many funding options (i.e. traditional bank financing) are not available to them. Being resourceful is a hallmark of every successful entrepreneur. Indeed, serial entrepreneurs enjoy an advantage because prior entrepreneurial experience has served to improve their entrepreneurial instincts and acquired the savior faire to recognize short-cuts to make such “discoveries” more rapidly. They also likely have raised funds before and have already established good relations with investors.

A founder(s) that possess the above attributes will be well-equipped to formulate and execute a winning opportunistic bootstrapping strategy and effectively deal within a relatively unknown, volatile and dynamic environment. As we will discuss further, assembling a founding team it is advisable to select those prospective partners that exhibit such attributes.

So what are the types of resources opportunistic Founders should be aware of and vigilantly seek? 

About the author

David possesses twenty years of entrepreneurial experience as a founder, co-founder, financial advisor or mentor to numerous tech start-ups in both America and Asia. He currently resides in Bangkok, Thailand where he serves as a private equity advisor at MBMG Capital. David continues to be an active advocate and participant in the Thai start-up scene serving as a board advisor to several promising start-ups and can be frequently seen participating as a mentor, key note speaker, panelist and pitch judge at local start-up events. Additionally, he guest lectures and advises entrepreneurial students at the leading university programs in Thailand including Thammasat, Sasin nad Bangkok University.

David has also been invited to serve as judge and key note speaker at start-up events throughout Southeast Asia, including the UN-Sponsored 2013 World Summit Awards held in Colombo, Sri Lanka. He continues to be a WSA Eminent National Expert and following the competition he successfully petitioned to have Thailand join the WSA Nomination Process, serving on the first WSA Thailand Nominating Committee.

David has written extensively on advising tech start-ups, including his Finance for Geeks and Thailand Startup Review. In 2013 his first book was published by John Wiley & Sons titled Start-Up Guide for the Technopreneur. David is planning to soon resume his Finance for Geeks Workshop Series.

David holds a B.A. Degree in History and Political Science from the State University of New York at Albany, a M.S. Degree in International Affairs from Florida State University and completed the coursework for the Masters in International Business Studies Degree from Georgia State University. He was formerly Series 3 and Series 7 Licensed as a registered broker in the American equity and futures markets respectfully.

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