I worked in Asia as an investment banker so my answer may not reflect
the situation in the US but hopefully give you something to start
with, especially I am not a registered expert and not suppose to
charge you at all.
Normally, fund raising fee in Asia charge 2% to 10% of the amount of
fund raise, depending on mainly on two key factors: (1) size of the
deal and (2) difficulty of the transaction which in turn depend on
what industry the company is in (whether it is a highly competitive
industry, is it new to investor and need more effort to explain).
In terms of latter factors, since you have not specified what kind of
company which need to raise fund so I cannot answer on an informed
basis and give a useful answer but in general, new concept which is
considered to be more risky (eg market entry risk) alone would result
a 5% fee even though size of funding to be raise is as high as
US$10-20 million. On the other hand, a new complimentary product
using new technology to compete with an product which is less cost
effective will yield a low fee component, say 1.5%. Adding this to
the second component is the total fee chargeable.
The second component is the total fund to be raise - irrespectively of
the size of the deal, the fund raiser need to do more or less the same
amount of work so the smaller the deal, the higher the % it would be.
Having said that, in Asia, a US$3-8 million deal yied a 1.5% (US$8M)
to 4% (US$3M).
Basically, UNLESS the product or company is highly risky, a US$3M fund
raising should charge you 5%-7%. If you think your company is a
difficult play for fund raising, prepare to pay 10%. But in any case,
25% is excessive.
Stanley =) |
