Bootstrap
Startups can begin with resources they can reasonably manage. A harmful mindset treats startups like they must follow a predetermined path, like attending college and securing a job.
Canva and Airbnb, both successful unicorn startups, initially bootstrapped their businesses before receiving external investments. Bootstrapping involves relying on self-generated funds and resources and offers advantages like maintaining full ownership, flexible decision-making, and simpler operations. However, it also has disadvantages like constant cash flow pressure, limited growth potential, and the inability to purchase resources with money.
While bootstrapping is more common in the US, it was historically less popular in Korea, where startups typically relied on external investments. After the dot-com bubble in 2000, Korean founders had to rely on personal savings or loans to start their businesses. The smartphone boom in the 2010s and government support led to a growth in Korea's startup ecosystem and a significant increase in venture capital investment. However, the rapid increase in funding and support may have resulted from a need for more understanding of Silicon Valley's organic development.
Korean startups often perceive that they must receive seed funding from accelerators, angel investors, or venture capital firms to succeed. This mindset can lead to a shock when entrepreneurs face increased risk and personal investment in their businesses. In addition, venture capital firms may push startups to grow faster than necessary, given their fund structures and the competitive nature of the industry. Recent news about the Korean startup industry has been negative, but focusing on revenue and cash flow is a normal part of running a business.