Professor John Mullins, from the London Business School, authored a book entitled “The Customer Funded Business”. He recently visited the studios of CNBC to share his perspective on how some VCs can be injurious to a business. Mullins states that running a business is a full time job. Raising capital is a full time job. If you are trying to do both one of them is going to suffer.
The question comes up about using crowdfunding and Mullins states that not every company can be customer funded. Perhaps he was not incorporating investment crowdfunding into his thesis because we have seen more than a few companies that have raised capital that were not necessarily front line consumer driven businesses.
The professor states the best of the VC funds generate astonishing returns and help create astonishing companies. But he continues to state the “wide array” of VC funds generate low single digits to negative returns. He says these funds are not doing so well for their limited partners yet they are giving the entrepreneur lots of advice on how to run their business (ouch!). He says, maybe the advice from that sort of VC isn’t on track…
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