With the rapid expansion of the modern venture capital industry, it has long been assumed that launching a tech startup requires institutional funding. However, an increasing number of founders are challenging this notion by embracing bootstrapping—funding their businesses through personal resources rather than external investments. Bootstrapping is not a new concept. Companies like Spanx, Craigslist, and GoPro were all built without venture funding in their early years, only scaling after becoming profitable. Now, a new variation of bootstrapping is gaining attention—“seed-strapping.”
What is Seed-Strapping?
The term “seed-strapping” has emerged as a response to the downturn in venture capital (VC) funding in Silicon Valley and beyond. It represents a hybrid model between bootstrapping and full-fledged VC-backed growth.
“There’s bootstrapping and then there’s venture capital… seed-strapping is what I’d call the Goldilocks version of that,” said Josh Payne, general partner at OpenSky Ventures, in an interview with CNBC. The approach involves raising a single round of funding to accelerate growth—then operating profitably without additional outside investment.
Following the 2008 financial crisis, the Federal Reserve slashed interest rates to stimulate economic growth, making borrowing money cheap. This fueled a surge in VC investments, with tech startups receiving massive valuations, particularly during the COVID-19 pandemic. However, the bubble burst as overvalued startups collapsed, including high-profile failures like WeWork.
As VC funding dried up post-pandemic, many founders began exploring alternative financing strategies, leading to the growing popularity of seed-strapping.
Why Some Founders Prefer Seed-Strapping
For some entrepreneurs, seed-strapping presents unique competitive advantages:
More Control – Founders retain decision-making power without pressure from external investors.
Faster Profitability – Instead of relying on continuous funding rounds, companies focus on achieving self-sustaining revenue sooner.
Less Dilution – Entrepreneurs maintain higher ownership stakes in their companies.
One of the most notable examples of seed-strapping is Zapier, a multinational software company. Wade Foster, co-founder and CEO of Zapier, began with a bootstrapped model before securing $1.3 million in seed funding in 2012.
Rather than pursuing multiple funding rounds, Zapier became profitable within two years and grew steadily, reaching $100 million in annual recurring revenue by 2020.
“At the time, most founders were either bootstrapping or raising full VC rounds—the idea of ‘one and done’ fundraising wasn’t mainstream,” said Foster.
Originally, Foster and his co-founders attempted pure bootstrapping, but financial constraints made progress slow. The seed round allowed them to go full-time on the company, accelerating their growth trajectory.
“For us, not raising more had nothing to do with the funding environment—it was about being profitable,” Foster explained. “We were tripling revenue year-over-year, and additional capital would have just created unnecessary pressure.”
Foster emphasized the biggest benefit of seed-strapping: maintaining autonomy. “We didn’t want investors in our kitchen calling the shots—we wanted to be in control of our own future.”
Is Seed-Strapping the Future of Startup Financing?
As VC markets fluctuate, more startups are considering seed-strapping as a viable growth model. The strategy allows companies to achieve scale without becoming overly reliant on external investors.
While venture capital remains a powerful tool for hypergrowth companies, seed-strapping provides a middle ground, offering founders both funding flexibility and financial independence.
As more success stories emerge, it’s likely that seed-strapping will continue gaining traction, redefining how startups grow and scale in an increasingly unpredictable investment landscape.
