Bootstrapping is back, thanks to cheaper tech

Interesting article in the NY Times about bootstrapping. The article concentrated on whether venture capital needs to change its approach, but I think the more important point is that bootstrapping is getting easier thanks to decreasing tech costs.

NY Times May 14: “..Is venture capital becoming obsolete for Web start-ups? Yes, according to Robert Hendershott, a professor of private equity and entrepreneurship at the Leavey School of Business at Santa Clara University. He makes the case in a paper in the next issue of the International Review of Entrepreneurship, formerly known as the International Journal of Entrepreneurship Education.

As the cost of starting a Web company decreases, thanks to cloud computing services and technology that entrepreneurs can rent instead of buy, many founders can finance a new company without the help of venture capitalists, using their savings, money from family and friends and credit card debt, Mr. Hendershott writes. More often, they are choosing to sell small, immature companies instead of taking the longer, riskier path of developing a business that could one day go public. That makes venture capital less relevant, he concludes.

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