Taking equity in a new company is always a question of risk vs. reward. But the upside potential is often very dramatic, as the following examples show.

For example the world’s most prestigious consulting firm, McKinsey & Co., has been bartering—accepting payment in stock—with approximately 150 innovative fledgling companies that don’t have the cash to pay standard fees of $275,000 to $350,000 a month. (The accrued equity is sunk in a blind trust and then liquidated into a profit pool for McKinsey’s partners.)

• Maryland Economic Development officials are committing an initial $2 million to a new for-profit venture designed to build companies around innovative research done in university and government laboratories.

Called BrainChild Maryland, the new entity will provide business development services, technology assessment, and market research to startups. The new and usually underfunded entities will barter equity in their company for assistance and direction from BrainChild.


Alternative Capital Payoff Turns $400,000 Into $128 Million!

In various articles over the years, BarterNews has cited many different forms of alternative or secondary capital. Here’s more. . .options and warrants.

A recent exciting payout was announced by the executive search firm, Heidrick & Struggles. It occurred when they decided to exercise their three-year-old warrants to buy 1.2 million shares of Google stock for 30¢ apiece.

The warrants were originally valued at $400,000—per Google’s SEC filings—and were provided to H&S as payment for finding Eric Schmidt, the Internet company’s new CEO, formerly chairman of software firm Novell Inc. in 2001. Google stock has risen to $108.22 per share since its IPO in mid-August, which netted the search firm $128.8 million.

(An alternative capital situation arises when a payment comes in any form other than cash. For a look at various examples refer to our “Secondary Capital” section, which is found under BARTER CATEGORIES on our web site.)

This entry was posted on Sunday, July 29th, 2007 at 11:29 am and is filed under Best & Brightest Barter. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.