Masters Of Their Own Destiny

These bootstrapped businesses have focussed on their core products and geographical markets and have grown with the economy since liberalisation

- Nagarajan Narasimhan

To be bootstrapped is the preferred choice of entrepreneurs the world over. Being self-funded helps lay a strong foundation for the business as the money at stake is almost entirely the promoter’s and, given the limited resources, there is a sharp focus on cost optimisation and cash generation.

This helps because external equity investors, if the founders ever choose to tread that path, like to see some success on the ground before committing large funds. It also helps in raising debt as lending by banks is typically security based, making sizeable promoter equity a necessary precondition.

That is why so many businesses have been launched with the founders’ personal or family resources and are run that way for years. Even as the business grows, there is often a reluctance to raise capital from external sources.

The opening up of the Indian economy in the early ’90s and the proliferation of the internet in the noughties, however, opened the floodgates to domestic and foreign capital. Many businesses adopted an aggressive growth path with capital raised from IPOs and private investors.

Yet, some others chose to remain bootstrapped and charted a steady growth path. A good 25 years since liberalisation, it is interesting to look at such companies and understand what drives them.

To search for genuine successes within the bootstrapped universe, we sifted through a database of over 25,000 small, medium and large companies (see box) based on certain criteria. Specifically, we looked at companies that have grown to a meaningful size (more than `500 crore in operating income, or turnover) in the past 25 years.