How to Finance and Grow Your Startup Without VC with Prof. John Mullins

The Indian Dream

We speak to John Mullins, Professor of Marketing & Entrepreneurship at the London School of Business and author of the fantastic book, ‘The Customer Funded Business’.
Timeline:
(3:20) - What is a Customer Funded Business?
(6:10) - How do Business Authors find the stories for their books?
(11:00) - What’s the difference between Cash Flow & Profits?
(15:30) - How do you change the processes and business mindset from just Profit to think about Cash Flow as well?
(22:00) - What is Float? How can Float help you grow your business faster?
(27:50) - What is the danger of startups raising capital too early?
(39:45) - The Pay in Advance Model
(46:40) - The Subscription Model
(50:15) - The Scarcity Model
(56:15) - The Service to Product Model
(58:20) - The Marketplace or Matchmaker Model
(1:02:20) - John’s thoughts on Ed Tech
(1:04:00) - How difficult was it to record his Course?

Why do we love this book? Because it shows us how any business can generate more cash in the bank. Most businesses don’t fail to grow because they’re not making profits - they fail to grow because they don’t have enough Working Capital. This means that even if they’re making profits, there’s not enough cash in the bank that allows them to buy raw materials, pay salaries and all the other expenses to run a business. And that’s when they run to VC’s to get more Working Capital to grow. The Customer Funded Business provides 5 different frameworks on how businesses can have more working capital in the system and thus more money in the bank to grow! We discuss all 5 frameworks in the episode.

Professor Mullins calls these Customer Funded Business Models where you’re using your customers to help grow the business instead of just selling tonnes of equity and raising Venture Capital funding. Why give away big chunks of your business when you can find ways to grow without VC money? The best entrepreneurs we’ve had on our Podcast were those that scaled without venture funding. Then these entrepreneurs had all the leverage in negotiations when they raised money to scale even further. We thought this conversation was especially relevant in today’s environment where Venture Capital funding has become ubiquitous.

If you want to learn more about how to build your own Customer Funded Business, you can also check out Professor Mullins course on Coursera - How to Finance and Grow Your Startup Without VC.