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The weekly newsletter for everyone interested in barter--the world's most versatile business tool!

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March 7, 2000

In this week's report. . .

  • Equity-for-advertising trade pays off big
  • Merchant bankers use barter when negotiating
  • The Zen of cash flow
  • Here & there. . .

Individual Investor Group Scores Big On Equity-For-Advertising Trade

Jonathan Steinberg, CEO of the Individual Investor Group, the parent of Individual Investor magazine, recently declared the results of a barter arrangement the magazine originally consummated in 1997.

Back then, the magazine provided Wit Capital with advertising and was paid with 250,000 shares of Series A preferred stock...valued at $250,000.

Then, as a result of a 7 for 10 reverse split of common stock and the completion of Wit Capital's initial public offering on June 4, 1999, these shares were converted into 175,000 shares of common stock, which has subsequently been cashed out at 10 times original value! In the company's fourth quarter they reported a one-time gain of $2.8 million from the sale of its stake in Wit Capital Group.


Barter Is Routinely Used By Our Nation's Most Powerful Lobbyists And Merchant Bankers

Former politicians and government officials often become lobbyists when they retire from their government positions. But today many are moving in another direction, becoming more involved financially in the companies they represent...and they call themselves merchant bankers.

Regardless of what title they use, today lobbyists/merchant bankers are scouting investments, raising money for business ventures, plus taking ownership in deals. And, more likely than not, barter is a component in the negotiations.

The well-connected now offer business advice and seek to attract investors, especially for high-tech companies. In return for their political connections and providing "strategic investment advice" these former government officials turned merchant bankers receive payment in the form of barter, i.e. stock (upwards of 10% ownership) in the companies they are assisting to secure government contracts.


The Zen Of Cash Flow

The power of a continual leveraging of your assets is staggering. Consider the following. . .

If you started with 2 pennies in the first square of your chess board and doubled the result sequentially through each of the remaining squares, you would end up with $184,467,440,737,095,516.16 in the 64th square!


Here & There. . .

  • Wasatch International Corp. has concluded negotiations for the global expansion of E-Pawn.com, entering into exclusive development and marketing rights for its online auction and barter site, and licensing of its software to Exchequer Investments (a privately held UK-based company).

    E-Pawn has created and developed a multitude of e-commerce web sites which include www.pawnshopauctionline.com, a buy, sell, barter site, and www.swappage.com which is a store front with over 3,000 interesting items from gifts to imported clocks, paintings and big ticket items such as automobiles, yachts, jets, homes and estates.

  • Another new barter site launch is scheduled for March by a Burlington, Massachusetts-based online barter service. Founded last August, ExchangeAnything.com the company's business model will focus on the online family, high tech, and college communities. An initial round of financing ($1 million) was recently concluded.

  • Burntsand, Inc., a North American provider of e-business solutions, reported strong growth in revenue and earnings for the fiscal year ended December 31, 1999. Revenues grew 117% to $38.6 million from $17.8 million in 1998. One of Burntsand's clients is San Francisco's BarterTrust.com.

  • Sportsline.com, the parent of Sports.com, a European site, found out the "name value" of three investors who contributed a comparatively paltry $2.5 million: Michael Jordan, Shaquille O'Neal, and Tiger Woods. The American icons attracted far more media attention from European newspapers than did the more than $50 million in funding from the likes of billionaire George Soros and investment bank Goldman Sachs Group.

    Incidentally, Sportsline.com became the first major site to tout celebrities when they traded stock to former NFL quarterback Joe Namath, who reportedly still holds the stock worth millions-of-dollars today.

  • NBC-TV, its shopping channel partner ValueVision International, and NBC Internet are trading advertising and promotion for a minority stake in SelfCare.com, a health and wellness e-commerce site targeting women and families.

  • Yet2.com is an internet company whose site allows major companies such as Boeing, Polariod, and 3M to post their technologies for license in an open forum when a deal is set between the parties. Yet2.com takes 10% of the value of the final contract, up to $50,000.

  • Another web site, uWork.com, founded in 1999, is offering business-to-business staff exchange for Fortune 500 companies. The exchange allows large corporations to more efficiently buy, sell, barter, and manage outsourced professional services such as information technology, finance, legal, and health care.

 

We welcome your comments, questions, and observations.
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