Question

What does "bootstrap" mean in entrepreneurship ?
a. It refers to starting a business without external investment and relying on personal finances or operating revenues.
b. It means acquiring large amounts of venture capital for quick business growth. Which of the above is/are correct ?

• A. a only
• B. b only
• C. Both a and b
• D. Neither a nor b

Hint:

Think of bootstrapping as a lean startup approach that prioritizes self-sufficiency and resourcefulness over external funding in the early phases.

Answer 1

The Correct Option is A

Step 1: Understand the literal meaning of "bootstrap".
The phrase "pull oneself up by one's bootstraps" implies achieving something through one's own efforts and resources without external aid. Step 2: Apply this literal meaning to the context of entrepreneurship.
In the business world, bootstrapping means starting and running a venture with limited resources, primarily relying on the founder's personal savings, early revenues generated by the business, and creative, low-cost strategies.
Step 3: Analyze statement 'a' in relation to the concept of bootstrapping.
a. It refers to starting a business without external investment and relying on personal finances or operating revenues. This statement directly aligns with the definition of bootstrapping. It emphasizes self-funding and organic growth.
Step 4: Analyze statement 'b' in relation to the concept of bootstrapping.
b. It means acquiring large amounts of venture capital for quick business growth. Venture capital is a form of external investment, typically sought to accelerate growth. This is the antithesis of bootstrapping, which aims to minimize or avoid external funding in the initial stages.
Step 5: Determine which statement accurately describes bootstrapping in entrepreneurship.
Statement 'a' correctly defines bootstrapping, while statement 'b' describes a different funding strategy focused on external investment. Step 6: Select the option that reflects the correct statement(s).
Option (1) "a only" is the correct answer, as only statement 'a' accurately describes bootstrapping in entrepreneurship.