Company's Products & Services Bartered For Equity In Promising Ventures
As the barter marketplace expands and the sophisticated use of this versatile tool grows, we're seeing a growing number of "barter investors" surfacing around the country.
A barter investor is defined as a company or an individual who is willing and able to make a needed and important investment in an early-stage idea on up to an established business.
In the majority of cases the investment isn't a passive one, but rather sees an active investor bringing a contribution that is importantenabling a leverage using the barter investor's already established infrastructure.
Depending upon an investor's niche and expertise, this contribution could, for example, include introducing one's clients to thousands of the barter investor's customers, or providing the advertising to gain new customers as well as other marketing expertise.
Additional contributions might be to offer billing and collecting services, processing of orders, warehousing, shipping, and other services like negotiating bank lines of credits. In short, participation by such an investor quickly fills holes and provides one with a running start.
Three Examples of Barter Investments:
A) The barter investor was an operating service company with a substantial unused line-of-credit. An investor guaranteed the line-of-credit for use by the entrepreneur at a predetermined price for stock. As the credit was used, equity ownership accrued for the barter investor. The investor became a member of this start-up's board of directors.
B) The barter investor, a computer manufacturing company principal, made available $50,000 worth of hardware, software, networking technology and system maintenance services, in exchange for a $50,000 equivalent equity position in the company.
C) The barter investor, a service company's principal, committed the company's staff and administrative infrastructure to handle all the customer service, payroll, accounts receivable and accounts payable, as well as all order fulfillment and inventory control for a rapidly growing CD ROM duplicator. The barter investor also functioned in an interim capacity as a CFO until one was hired.
In these examples we see that the entrepreneurs offered equity to vendors who became barter investors by trading their support services and infrastructure for equity in the firms.
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