Bootstrap / Self-Financing

Building with Your Own Resources — Full Control, Full Ownership

Bootstrap financing means growing your business using personal savings, retained earnings, or internal cash flow without external debt or equity funding. It allows founders to retain control and equity while promoting lean and efficient business practices.

What It Means

·       Bootstrap: Using one’s own funds or revenue to finance operations and growth.

·       Self-Financing: Reinvestment of internal profits or personal capital without approaching banks, investors, or VCs.

Governing Considerations

·       No specific statute governs bootstrap funding — it’s a strategic financial choice.

·       Income Tax Act (on capital infusion and use of funds)

·       Companies Act, 2013 (for documenting capital introduction and maintaining records)

Process

1.     Planning cash flow requirements and cost forecast

2.     Infusion of founder capital or retention of earnings

3.     Recording capital as unsecured loan or equity (as applicable)

4.     Use for working capital, hiring, marketing, or operations

5.     Governance and documentation for compliance

Key Benefits

·       Full ownership and control retained by founders

·       Lean operations and strong financial discipline

·       Avoidance of dilution, debt, or external pressure

·       Stronger valuation in future funding rounds due to disciplined scaling

Ideal For

·       Early-stage startups and service businesses

·       Entrepreneurs with available personal capital

·       Founders testing product-market fit before raising funds

Basic Requirements

·       PAN and bank account for fund inflow tracking

·       Proper board approval and accounting treatment

·       MCA filings if capital is introduced as equity

·       Clear documentation of terms if capital is introduced as a loan

How LTC can  Help

·       Advisory on structuring bootstrap capital (equity vs. loan)

·       Drafting board resolutions and shareholder documents

·       Accounting, tax, and compliance advisory

·       Legal vetting for any founder loan agreements or fund infusion instruments

·       Planning transition to debt or equity in later phases if required