Abstract: A supply chain consisting of an OEM supplier, a start-up and demand market is considered. The start-up under capital constraints meets market demand by investing in capacity building or purchasing from the OEM supplier. The optimal decisions of the start-up's production capacity and ordering quantity are investigated with the goal of shareholders' equity value maximization. The results show that when the loan volume is unlimited, as the initial self-owned funds of the start-up gradually increase, the optimal production capacity of the start-up remains unchanged first, then gradually increases, and finally declines; and neither adopting entire outsourcing strategy when the capital is scarce nor adopting entire self-making strategy when capital is almost sufficient is the best choice for the start-up.