what is bootstrapping 
the term bootstrapping refers to a situation in which an entrepreneur starts a company with little capital when an individual bootstraps they rely on money other than outside investments an individual is said to bootstrap when they attempt to establish and build a company from personal finances or the operating revenues of the new company bootstrapping also describes a procedure used to calculate the zero coupon yield curve from market figures understanding bootstrappingbootstrapping a company occurs when a business owner starts a company from the ground up this means that the owner establishes their business with little to no assets founders typically rely on personal savings sweat equity lean operations quick inventory turnover and a cash runway to become successful for example a bootstrapped company may take preorders for its product thereby using the funds generated from the orders actually to build and deliver the product itself compared to using venture capital bootstrapping can be beneficial because the entrepreneur can maintain control over all decisions on the downside this form of financing may place unnecessary financial risk on the entrepreneur furthermore bootstrapping may not provide enough investment for the company to become successful at a reasonable rate bootstrapping is contrasted with starting a company by raising capital through angel investors or venture capital firms individuals who use these means to start their businesses typically have a proven track record or an idea that others may find profitable and promising with the potential for large returns special considerationsin investment finance bootstrapping is a method that builds a spot rate curve for a zero coupon bond 1 this methodology is essentially used to fill in the gaps between yields for treasury securities or treasury coupon strips for example since the t bills offered by the government are not available for every period the bootstrapping method is used to fill in the missing figures to derive the yield curve the bootstrap method uses interpolation to determine the yields for treasury zero coupon securities with various maturities 