Customer finance

Customer finance

Customer finance is a technique used by entrepreneurs to capitalize their companies. It is different from traditional techniques such as boot-strapping, angel finance, debt, mezzanine and venture capital.

Advocated largely by David A. Silver, customer finance can involve selling "problem" and "solution" definitions to your target market in order to raise money. For example, if an entrepreneur has focused on the problem of say "corporate alcoholism", he or she may send out subscription offers to a list of Fortune 500 companies detailing the problem in terms of loss of productivity, liability exposures, bad morale etc. The money raised from subscriptions would go to producing the solution, say a new herbal medicine- to be sold to the newsletter subscribers. So, in essence, the customer financed the venture.

Another approach to customer financing is "viral equity", used recently by Liam Mulhall of Blowfly beer. The company, in order to get started, sold equity to customers. From this perspective, making customers your shareholders, is beneficial in providing market research, capital, a customer base, a skills base and word of mouth advertising (people tend to advocate products they are invested in).

All in all, some people observe that customer finance is the smarter way to capitalise a start up- it goes beyond asserting "We'll go raise venture capital" or "I'll get a shag".


Wikimedia Foundation. 2010.

Игры ⚽ Нужно сделать НИР?

Look at other dictionaries:

  • Customer relationship management — (CRM) is a widely implemented strategy for managing a company’s interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processes principally sales activities, but… …   Wikipedia

  • Customer Lifetime Ansatz — Customer Lifetime Value (CLV) ist allgemein der Deckungsbeitrag, den ein Kunde während seines gesamten „Kundenlebens“ realisiert, diskontiert auf den heutigen Tag. Es ist eine Kennzahl aus der Betriebswirtschaft. Neben historischen Umsätzen wird… …   Deutsch Wikipedia

  • Customer Lifetime Value — (CLV) ist allgemein der Deckungsbeitrag, den ein Kunde während seines gesamten „Kundenlebens“ realisiert, diskontiert auf den heutigen Tag. Es ist eine Kennzahl aus der Betriebswirtschaft. Neben historischen Umsätzen wird auch der zukünftig… …   Deutsch Wikipedia

  • finance lease — A term used in UCC Article 2A. A lease in which the lessor is not the supplier or manufacturer of the leased goods. In a finance lease, the lessor must not have any involvement in the selection of the leased goods and it must be serving only as a …   Financial and business terms

  • finance company — an institution engaged in such specialized forms of financing as purchasing accounts receivable, extending credit to retailers and manufacturers, discounting installment contracts, and granting loans with goods as security. [1925 30] * * *… …   Universalium

  • finance charge — The total cost of credit a customer must pay on a consumer loan, including interest. Bloomberg Financial Dictionary * * * ▪ I. finance charge finance charge ➔ charge1   [m0] ▪ II. finance charge finance charge …   Financial and business terms

  • finance charge — / faɪnæns tʃɑ:dʒ/ noun 1. the cost of borrowing money 2. an additional charge made to a customer who asks for extended credit …   Dictionary of banking and finance

  • Factoring (finance) — This article is about finance. For other uses, see Factor (disambiguation). Corporate finance …   Wikipedia

  • Debtor finance — is a generic description of a funding process, based on the value of a business accounts receivable ledger. Debtor finance is also marketed as invoice discounting, factoring, cashflow finance, asset finance, invoice finance and working capital… …   Wikipedia

  • business finance — Raising and managing of funds by business organizations. Such activities are usually the concern of senior managers, who must use financial forecasting to develop a long term plan for the firm. Shorter term budgets are then devised to meet the… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”