It seems like every couple of months, as is the case with social media, I have seen another clip doing the rounds again on LinkedIn. It is a video of Jeff Bezos talking to Jay Leno on The Tonight Show back in 1999.
Leno raised the fact that at this point Bezos and Amazon had never made a profit and had in fact been losing money right from the start, to which Bezos laughed almost maniacally and told Leno that Amazon was “famously unprofitable” — a statement which left Leno and most of the crowd speechless.
The numbers tell the story. While Amazon garnered $1.6 billion in sales in 1999, it also suffered net losses of $720 million, as highlighted in a BBC report. The company’s share price was notoriously volatile during this period, dropping from $113 a share in December 1999 to just $52 by June 2000.
However, before things got too awkward during the show, Bezos had to explain that this happens all the time where new companies actually bleed money in the beginning but are backed by big money. Bezos did point out, though, that no company up until Amazon had operated at quite the same scale before.
It seemed as though Leno and his audience were all too unfamiliar with the topic of venture capital and how founders will seek capital from VC funds in order to fund their ideas on the premise of future profitability and big returns.
There are mainly two ways in which someone can start a business: either by bootstrapping or raising funds. Bootstrapping means building a company using personal finances or operating revenues without external help, requiring founders to be resourceful and frugal as they gradually grow their business. Raising funds, on the other hand, means seeking external investment from venture capitalists or angel investors, trading equity in the company for the capital needed to scale quickly.
However, in recent years there seems to be a new concept which business owners are growing more attracted to. The concept of “seed-strapping” — a hybrid approach that gives founders the ability to get their idea off the ground without having to give up too much equity. This middle path combines the best elements of both traditional approaches, allowing founders to maintain control while still accessing the resources they need to grow.
How does seed strapping work?
Seed-strapping is the strategic blend of minimal seed funding and bootstrapping principles. Unlike traditional venture capital routes where founders might raise millions in early rounds, seed-strapping involves raising just enough external capital—typically between $100,000 to $500,000—to create initial momentum, while applying bootstrapping discipline to make that money last.
The philosophy behind seed-strapping is straightforward: take just enough outside money to overcome early hurdles that pure bootstrapping might not surmount, but not so much that founders lose control or feel pressured to pursue growth at the expense of sustainable business fundamentals.
For many entrepreneurs, seed-strapping represents the “Goldilocks zone” of startup funding—not too much external pressure, not too little capital to work with. It allows founders to focus on building a viable product with real market demand before seeking additional investment rounds.
Several factors have contributed to the rise of seed-strapping as a viable business strategy:
First, the startup ecosystem has matured. Founders and investors alike have witnessed the downfalls of both extreme approaches—the slow growth constraints of pure bootstrapping and the high-pressure “grow at all costs” mentality of heavily funded startups. Seed-strapping offers a more balanced path.
Second, the cost of launching many types of businesses has decreased significantly. Cloud infrastructure, no-code tools, and global talent pools have made it possible to build and validate business models with less initial capital than was required even a decade ago.
Third, there’s growing recognition that sustainable growth often beats hypergrowth. The pendulum has swung from the “blitzscaling” era toward business models that prioritize unit economics and profitability from earlier stages. Seed-strapping aligns perfectly with this shift in thinking.
Is seed strapping the new way to start a business?
While seed-strapping offers an attractive middle path for many founders, it’s important to recognize that it’s not necessarily superior to traditional approaches in all situations. Each funding strategy has its own strengths that may make it the optimal choice depending on the specific business, market, and founder goals.
The Advantages of Pure Bootstrapping
Bootstrapping still offers unmatched benefits that seed-strapping can’t fully replicate:
Complete ownership and control remains the most compelling advantage. Bootstrapped founders answer to no one but themselves and their customers, giving them ultimate freedom to pursue their vision without compromise.
The discipline imposed by resource constraints often leads to remarkable innovation and efficiency. When every dollar counts, bootstrapped companies typically develop leaner operations and more sustainable business models from day one.
Bootstrapped businesses also enjoy the luxury of privacy. Without external investors, these companies can operate without disclosing financial information or strategic decisions to outsiders, allowing them to pivot or experiment without scrutiny.
Additionally, the absence of investor pressure allows bootstrapped companies to grow at a natural pace that matches their market opportunity and operational capacity, rather than forcing artificial growth to meet investment milestones.
The Unique Benefits of Traditional VC Funding
On the other end of the spectrum, traditional venture capital continues to offer advantages that seed-strapping cannot match:
Access to significant capital remains the primary benefit. For businesses with high upfront costs or those operating in winner-take-all markets, the ability to raise millions or even billions of dollars can be the difference between dominance and obsolescence.
Beyond money, top-tier venture capital firms provide invaluable resources through their networks. These connections can open doors to potential customers, partners, and talent that would take years to develop independently.
Strategic guidance from experienced investors who have seen hundreds of companies grow can help founders avoid common pitfalls and capitalize on opportunities they might otherwise miss.
The validation that comes with securing investment from respected firms also serves as powerful social proof, making it easier to attract customers, partners, and employees who might otherwise be hesitant to engage with an unproven company.
In highly competitive markets, the ability to scale rapidly through VC funding can create insurmountable advantages in terms of brand recognition, network effects, and market share before competitors have a chance to respond.
