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In this paper, I investigate whether bootstrapping is a suitable funding strategy for innovation in the software industry. I argue that bootstrapping empowers innovation through creative search paths and flexibility, and that this is accelerated by the founding team's social and human capital. I performed a cross-sectional analysis of 193 Israeli startups on the innovative performance of bootstrapped firms compared to their counterparts and found surprising results. Firstly, I found that the innovative performance of software startups has no direct relationship with their funding strategy, but rather with the human capital they acquire through the chosen strategy. Secondly, I found no evidence of the founding team's moderating effect, although the results reveal that it facilitates both the funding and innovation processes of startups. The findings add a fresh perspective on entrepreneurial funding choices and emphasize the importance of human and social capital for firm innovation, growth and survival.
About the author
Danilo is an innovation enthusiast, who is constantly looking for ways to challenge and improve how companies operate and grow. With a multi-cultural background and a Master's degree from the Rotterdam School of Management, Danilo is on a mission to empower businesses through technology.
