Custom-made: Customer Funding for Business Growth
This is one of our free-to-access content pieces. To gain access to all Ideas for Leaders content please Log In Here or if you are not already a Subscriber then Subscribe Here.
Venture capital (VC) is the default route to gaining funding for a growing business. But there are other ways to unlock money, indeed, some of the largest and most successful companies never raise any venture capital. Change your approach to growth by focusing on your customers, not investors, as your means to the end.
Eureka! You’ve had the great idea, now you are off to write your business plan, get some investors on board, and head down the road to riches, simple as that.
This traditional approach to starting a business may seem obvious but the obvious course of action is not always the best, or the easiest, especially in these straitened times. Raising venture capital is time-consuming, it can be risky when you have little proof that your idea will work, and it may well come with onerous terms you have to adhere to.
Recent research points to models for funding a business that utilise customers, not investors, with some of the most interesting applications coming from India and other emerging markets.
The common link with these models is that they look to their customers for early funding. By using the customer base to help grow the business, they are in a much better position to get VC later on.
Keep in mind the following advice:
Plan B – Re-thinking Funding, Mullins. J, Business Strategy Review Issue 4 – 2012
Ideas for Leaders is a free-to-access site. If you enjoy our content and find it valuable, please consider subscribing to our Developing Leaders Quarterly publication, this presents academic, business and consultant perspectives on leadership issues in a beautifully produced, small volume delivered to your desk four times a year.
For the less than the price of a coffee a week you can read over 650 summaries of research that cost universities over $1 billion to produce.
Use our Ideas to:
Speak to us on how else you can leverage this content to benefit your organization. info@ideasforleaders.com