What should my finders fee be?


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I have an old friend who is a VC guy. Upon reconnecting with him and catching up, he informed me that he was currently looking to raise 3MM for this company. He asked if I knew anyone.

His medical device company was on to something very innovative. In casual discussion with another friend, I mentioned to him my friend's need. He told me that his brother might have a strong relationship with a company that might be interested in knowing more.

They are closing a deal worth 30MM. When this conversation began, I mentioned to my VC friend without much thought to my compensation that I would expect 1% of anything that was secured.

Question: Am I legally able to receive any money for my involvement? If so, who should pay me? The company receiving the money or my VC friend? I know my friend's brother will be receiving a % of the deal and will pass some it over to his brother.

Venture Capital Fees

asked Mar 28 '14 at 17:56
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User33873
1 point
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1 Answer


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You should read this question: What are the going rates for finders fee?

Finder's fees can vary all over the lot, but the fee is ALWAYS paid by the company. Fees will vary depending on who the finder is (a professional intermediary, like an investment banker, vs. just an ordinary schmoe making an introduction), how much work he/she does beyond simply introduction (from helping to craft a summary selling document to soliciting various investor groups, etc.), how large the investment (more on that below) and from whom (private individual, angel investor, venture capital firm or financial institution).
An industry standard is the Lehman formula, which is typically, 5% of the first million; 4% of the amount above $1 million up to $2 million; 3% of the amount above $2 million up to $3 million; 2% of the amount above $3 million up to $ 4 million, and 1% for all amounts above $4 million.
answered Mar 28 '14 at 18:08
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Richard Poole
189 points
  • Sounds like the OP's case is an informal introduction/referral, which I agree with Jason Cohen should be free. A gratitude, future favor, or a nice dinner should be sufficient as a thanks from the friend whose company got the money. The company got (borrowed, if there are convertible notes involved) working capital for their company, not the same as sale. – Webbie 7 years ago

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Venture Capital Fees