Need help raising capital? “Finders” – individuals who help raise money for a percentage of the money raised – on the surface seem like an appealing way to raise capital. It seems to accomplish the goal: the fund or startup raises the money needed, and the finder is paid a “success fee” out of the monies raised (known as "transaction-based compensation"). The big “However” is that many of these finders are operating in a gray area of law, which can have very significant implications for the fund or startup. This blog post outlines some of the issues relating to finders. Note that this post is not to be construed as legal advice – consult with your attorney.
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