I find that most people really believe in bootstrapping right until the very moment that they have a realistic chance of taking on institutional funding.
The reality is that there is no single right way to build a company. You can find lots of survivors who used all sorts of capitalization strategies.
The biggest issue with funding is that, many times, the only reason you need it is that someone else has it. If you are competing for market share with someone willing/able to take losses, it's not going to be a pretty fight. The best you can do is take things one step at a time and hope the other guys screw up, but there's a very real chance you're screwed.
The reality is that there is no single right way to build a company. You can find lots of survivors who used all sorts of capitalization strategies.