Trading shares of stock is gaining popularity in the investment and securities arena. Typically companies will sell 144 restricted stock for Trade Dollars which is a form of currency recognized by the IRS. Companies can then use the Trade Dollars to offset cash marketing costs with trade thus marketing the stock and advertising the company to gain name recognition and market share.
Other cash expenses that can be offset with trade purchases include design of company logos and collateral materials, software and mobile app development, travel accomodations, printing of annual reports, 10Ks and 10Qs, legal services, website design and a host of other services typically needed to launch a company, an ICO, an IPO or remain compliant.
Pre-IPO companies can also use stock sales to build a Trade Dollar reserve which may be used as assets. Or, Trade Dollars can be used to purchase other hard assets such as real estate.
Companies should always do their due diligence by discussing these concepts with their advisor or accountant to determine their feasibility.
An added benefit to companies that sell stock for Trade Dollars is the accrual of new investors who talk about their investment to friends, family and associates who can become potential cash investors thus creating demand for the stock and trading activity.
Since Trade Dollars come from excess capacity or from additional new business and have a low incremental cash cost, many investors can be more aggressive and take chances in investing in new companies.
Because trade exchange members can earn Trade Dollars without significantly affecting cash flow, investors can buy speculative stocks and wait for share values to go up. Once the restriction expires, it may be possible to turn trade investments into cash.
Making it Happen...
Be on the lookout for early stage companies pitching to investors, angels and VC's. Let them know that you have numerous people that could have an interest in investing alternative currency in their company.
Ask for a presentation deck or prospectus to learn about a company's use of funds. Use of funds details will help you determine which requirements can be paid for in trade to reduce their cash requirements for expenses and how much trade they can use to offset cash expenses.
You can also collaborate with angels and investors who may introduce you to investment opportunities that they are considering. This could help you facilitate "side-car" transactions for your members, whereby they could invest alongside angels and investors who have already done due diligence on the companies to determine investment worthiness.
There are immediate benefits to an early stage company to accept trade dollars for equity:
- New group of investors in the company.
- Adding investment milestones to their investor presentation.
- Having a bank of credit to pay for expenses makes a company more attractive to angels and cash investors.
- Create a back to back trade between two members, such as equity in a company in exchange for a prepaid expense such as developing an app, software or a website.
- Pitch using trade to offset cash expenses to angel groups and investors, as it gives them additional alternative capital to posse their cash investment, which reduces risk.
- Introducing trade investments to angels and investors will foster finders that will bring you new members and instant trade transactions.