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What is the normal fee to use a broker to obtain VC funding?
The basic concept is that you pay a broker to sell your securities - raise you money.
There is no normal fee - Broker fees range significantly. However, a higher monthly retainer doesn't always mean better service.
We always advice entrepreneurs to watch out for brokers who charge a monthly retainer and ask for very little on the back-end (a percentage of the deal) as there is very little incentive to actually raise you any money when they are getting a check from you every month.
On the other hand, it is very tough to find a broker that will work solely on a success fee basis. I have yet to meet one, unless the deal was simply a no-brainer and he knew exactly who would fund it.
If the broker is willing to negotiate on the monthly and take more of a success fee its usually a good sign. Also, you have to do some Due Diligence on your broker - check out his track record. If you are going to hire someone to do this, you have to be comfortable.
Lastly, and most importantly, make sure this broker is licensed! Securities are governed by the SEC - if you broker is not licensed with the SEC you may run into some serious issues down the road. While it might be overlooked, when you have someone introduce you to THIS round of early-stage capital, when you go after your NEXT round of institutional capital, the VCs will not look favorably upon this - and it will most likely ruin your chances of getting capital.
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