A “Custvestor” – a new type of investor

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By  , CrowdfundBeat Sr. Guest Editor , FinTech Entrepreneur  CEO fundpaas,

A custvestor (noun) is a customer of a privately-held business that provides a product or service that s/he consumes AND an investor in the same business. In addition to being a cost-efficient, faster and friendlier source of capital for Small & Medium Sized Businesses (SMBs), custvestors also provide the highest level of brand loyalty since their “switching costs” increase as a result of investing and consuming in the same product or service. Also, investors that provide both cash and business support can be more valuable than funds alone.

Origin of the word

Custvestors were born as a result of the legalization of equity crowdfunding in the United States. As of the summer of 2015, there were 17 states that had approved crowdfunding exemptions and 21 that were soon to follow. Also, at the federal level, Title IV (aka Reg A+) of the JOBS Act in the USA made it possible for anyone to invest in a privately held business within certain limits.

Source: NASAA

Related Words

CustVesting – the act performed by custvestors when supporting the brands that they love and investing in what they know. CustVesting typically involves providing an asset owned by the custvestor which can be, but not limited to:

  • an investment of money like buying an equity stake (e.g. Stock) in a business or lending capital (e.g. Loan) to a growing business in exchange for financial return.
  • an investment of time like working alongside an entrepreneur as a consultant or mentor who in turn, provides a product or service that you purchase on a regular basis.
  • an investment of social influence (e.g. endorsement or introduction) like tweeting about a business or brand that one loves which in turn leads to additional customers, revenues or both.

 

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