Venture Capital Charges

[TexasTower]

So, if someone goes out and finds venture capital for my company, what is the standard charge for that? Do they take a percentage of the money raised or have a flat fee typically?

 

[Uninformed]

You can structure the deal any way you want. It can be straight commission. It can be equity. It can be an upfront fee. Or it can be any combination of the above. Remember, however, they can't get venture capital for you. They can only help get you in front of the right people. If they don't get you in front of those people, they are basically worthless. Helping you write the business plan and hone your presentation is of little value if you aren't getting your foot in the door.

As a bit of an aside, in most instances venture capitalists will look for a local VC firm to take the lead. Thus, if you are in Texas, the most productive meetings will be with VC firms which are in Texas. As an alternative, they may request that you move the company to where they are located. Also, VC firms usually want to put in their own management in place. This is often a big stumbling block.