29/09/2020
‘Cash is King’ is the most famous expression in the startup world, given how many founders end up failing without it. However, successful entrepreneurs such as Huda Kattan (Huda Beauty) and Ben Francis (Gymshark) were able to build billion-dollar enterprises with limited external financing. How? Well, by leveraging the power of negative cash conversion cycles.
Essentially what this means is that it takes you longer to pay your suppliers/ bills than it takes you to sell your inventory and collect your money, which, de-facto, implies that your suppliers finance your operations. You thus do not need operating cash to grow!
For more on how to achieve a negative cash cycle check out the article https://hbinvestments.com/how-to-build-a-billion-dollar-company-without-external-funding/ by Imad El Fay (Investment Partner and Venture Builder at HBI).
Gymshark, Huda Beauty and the wonders of negative cash conversion cycles Albert Einstein once said, “Compound interest is the eighth wonder of the world. He, who understands it, earns it,...
