On January 27 at 18:00, Garage48 HUB hosted John Mullins, known for bestseller books The New Business Road Test and Getting to Plan B, as a guest speaker, and more than 50 audience came to listen to “What Entrepreneurs and Angels Should Do Before They Dance”, a short lecture based on his latest book The Customer-Funded Business: Start, Finance, or Grow Your Company with Your Customers' Cash.
In recent years, the idea of funding from venture capitals, angel investors or incubators has widespread among startups. However, he insists that majority of startups should raise money from their customers instead of investors especially in the early stages. Main reason why seeking for fundraising from investor is not the best way for early stage startups is that it mostly is waste of precious time which could be put to improve service or product, proved by the fact that the rejection rate at well-known investors such as Y Combinator, AngelList and Andreessen Horowitz is 97-99 percent. Accordingly, he presented the customer-funded business as an alternative way to raise money for startups.
He introduced 5 types of customer-funded business:
During the event, there were marvellous interaction between the speaker and the audience. Especially the Q&A:
The question was when should startups start fundraising from investors? The answer was that startups should get their customers first, and then raise money from investors. The timing of fundraising depends on if the service or product can easily copied by others or not. If there is big possibility that someone will imitate the service or product, the fundraising from investors should be hastened.
Those who like to learn more about his idea or missed the event can take a look at his website customerfundedbusiness.com or his book The Customer-Funded Business: Start, Finance, or Grow Your Company with Your Customers' Cash.