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Q: Finder fee ( No Answer,   7 Comments )
Question  
Subject: Finder fee
Category: Business and Money
Asked by: sharon_de_salmon-ga
List Price: $10.00
Posted: 18 May 2005 07:37 PDT
Expires: 22 May 2005 23:43 PDT
Question ID: 522920
what is the normal rate of "finder fee"
I am trying to raise money for some idea.
I do not know what should i give to a middle man that will find me an investor
do i suppose to give him percents ? mony ? shares ?
for the example I try to raise 500K for 50% (1M after the money)
Answer  
There is no answer at this time.

Comments  
Subject: Re: Finder fee
From: silver777-ga on 18 May 2005 07:51 PDT
 
Depends on the idea and rate of return. 5% seems to be a high
end percentage of the scale payment for an introducer. 

Why give half away, why lose control? Maintain 51% minimum.
Subject: Re: Finder fee
From: sharon_de_salmon-ga on 18 May 2005 12:05 PDT
 
so the finder do not get any holdings ?
what about the case of failure ? does this 5% on top of other fixed price ?
Subject: Re: Finder fee
From: boii-ga on 18 May 2005 17:17 PDT
 
I have the answer for you, but am unable to find the link to "answer"
the question. Catch-22 eh.
Subject: Re: Finder fee
From: boii-ga on 18 May 2005 17:24 PDT
 
Oh, apparently I'm not a "Researcher" and not allowed to answer.
Anyway, in good faith:

This is the most common format of "finders fees" structure:

In exchange for advisory services in respect to raising capital
<company name> agrees to pay <name of person> the following:

5 Per Cent of the total dollar volume of the investments made by the
investors introduced by <name of person> no more than 60 days following the
investment. If the investors object to this fee or other unforeseen
legal problem arise due to this agreement other arrangements will be
made following the same percentage.

An additional <usually 2-4>% of the total dollar volume raised will be
provided as stock options if and when the entity is launch and stock
options issues.
These options will be provided at a "Founder" rate..  i.e. The same
pricing as the principals.

My research method:
It's what I do for a living.

Cheers.
Subject: Re: Finder fee
From: boii-ga on 18 May 2005 17:25 PDT
 
^ forgive the typos. the meat is there.
Subject: Re: Finder fee
From: sharon_de_salmon-ga on 19 May 2005 11:39 PDT
 
so what happens if the investor do not want to pay the fee.
what is usualy the alternative for awarding the finder ?
is it bigger percentage ?
Subject: Re: Finder fee
From: myoarin-ga on 20 May 2005 18:47 PDT
 
Hi, 
The investor should expect that a middle man will get a commission,
but that is your business expense.  The investor puts up 500k capital
or loan that goes on the books of your business in that amount, and
you pay the "finder"  x % and book it as an expense.
If the investor makes a loan to you, you owe him the full amount.

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