Financial bootstrapping and venture development in the software industry

C.M. Mason, R.T. Harrison

Research output: Contribution to journalArticlepeer-review

112 Citations (Scopus)


Access to finance has been identified as a significant constraint on the development of technology-based businesses. Although important, institutional venture capital and business angel finance are used by only a small proportion of new and growing ventures. The role of bootstrapping - defined here as access to resources not owned or controlled by the entrepreneur - has been largely overlooked in studies of small firm financing. This paper redresses this omission by analysing the role and importance of bootstrapping in product development and business development in the independently-owned software industry. Results from two regions of the UK - Northern Ireland and South East England - are compared with equivalent data from the USA (Massachusetts). Overall, bootstrapping techniques are less extensively used in the Northern Ireland industry than in South East England, and in both regions bootstrapping is less common than in Massachusetts. This may account for the smaller employment size, growth profile and stronger service/consulting orientation of these firms. Moreover, there appear to be considerable variations in the use of bootstrapping. Larger firms tend to make more use of bootstrapping for product development, and consider it more important than do smaller firms, who more highly value business development-related bootstrapping. Small firms are also more likely to use and value cost-reducing bootstrapping techniques, whereas larger firms make more use of the exploitation of value-chain based relationships.
Original languageEnglish
Pages (from-to)307-333
Number of pages26
JournalEntrepreneurship and Regional Development
Issue number2
Publication statusPublished - 2004


  • software industry
  • entrepreneurial finance
  • bootstrapping
  • product development
  • business development
  • regional development


Dive into the research topics of 'Financial bootstrapping and venture development in the software industry'. Together they form a unique fingerprint.

Cite this