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Seeding the cloud: Financial bootstrapping in the computer software sector

Mac an Bhaird, Ciarán orcid logoORCID: 0000-0003-2863-3398 and Lynn, Theo orcid logoORCID: 0000-0001-9284-7580 (2015) Seeding the cloud: Financial bootstrapping in the computer software sector. Venture Capital, 17 (1-2). pp. 151-170. ISSN 1369-1066

Abstract
This study investigates resourcing of computer software companies that have adopted cloud computing for the development and delivery of application software. Use of this innovative technology potentially impacts firm financing because the initial infrastructure investment requirement is much lower than for packaged software, lead time to market is shorter, and cloud computing supports instant scalability. We test these predictions by conducting in-depth interviews with founders of 18 independently owned nascent enterprises, of which three quarters have adopted cloud computing. We identify particular bootstrapping methods used by start-ups in the computer software sector. Cloud computing enables firms to develop and launch products with minimal resources, reducing barriers to entry, with consequent increased competition. The primary business bootstrapping technique is foregoing wages, supplemented by small amounts of grant funding. Customers are a source of knowledge and expertise for product development, which occurs in an iterative process. Product bootstrapping techniques have changed in response to technological innovation, although methods to acquire tangible assets are identical over time. Astutely applied, financial bootstrapping is a resource management strategy essential to the growth and survival of high technology firms.
Metadata
Item Type:Article (Published)
Refereed:Yes
Uncontrolled Keywords:Software industry; Bootstrapping; Cloud computing; Social networks; Private equity; Business angels; Disruptive innovation
Subjects:Business > Finance
Computer Science > Computer software
Business > Intellectual capital
Business > Economics
DCU Faculties and Centres:DCU Faculties and Schools > Faculty of Humanities and Social Science > Fiontar agus Scoil na Gaeilge
Publisher:Taylor & Francis
Official URL:http://dx.doi.org/10.1080/13691066.2015.1021030
Copyright Information:This is an electronic version of an article published in 'Venture Capital', available online here http://dx.doi.org/10.1080/13691066.2015.1021030
Use License:This item is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 3.0 License. View License
ID Code:20855
Deposited On:07 Oct 2015 10:26 by Ciarán Mac An bhaird . Last Modified 26 Oct 2018 11:57
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