Raising capital to finance growth for game and tech companies is one of the important responsibilities a leader will havem=, and to do it successfully you must realize it is not just about getting money in the bank. My post last week about Hasbro’s acquisition of Backflip Studios highlighted how smart cash management enabled the Backflip management team to capitalize on the opportunity with Hasbro (and make out quite well for themselves) largely because they did not receive significant investment. Had they taken a large investment at a high valuation, they most likely would not of been able to work with Hasbro. A recent Harvard Business Review article, Use Customer Cash to Finance Your Start-Up by John Mullins highlights the success many tech companies are having building a business through their customers’—not investors’—cash.
The Airbnb story
Airbnb is a great example of a company relying on customer cash to finance growth, allowing it to reach a point at which it was valued at over $1 billion when it did raise venture capital. Continue reading “Turning your customers into your venture capital”