% to pay a dedicated equity raising partner?

[Anders Jax]

So if my firm hired someone to raise equity for us, and of course they wanted compensation based mainly on how much equity they could raise us, what would you think is fair breakdown (yes this is legal, I've consulted with a lawyer).

They were proposing 5% of first $5m, 4% of next $5M, and 3% there-after.  And all the relationships that they bring in, they get those same percentages if more money is raised from those contacts, for 3 years after termination or voluntary departure.

What do you think??

[Ronald Rohde]

Originally posted by @Anders Jax:

@Ronald Rohde

The developer has amazing returns but they are going for projects 10x the size of their normal single family ones of the past, so they arent holding the stronger hand in terms of risk and need. The institution I’d raise them money from could commit hundreds of millions to a firm that has probably raised $15m total in last 5 years.

 So i'll tell you that your introduction, while valuable to you, will likely cut you out given the key players size and experience. Even if you sign a written agreement, they won't pay. Which means you have to sue, they will defend and claim a lot of unlicensed securities brokering, etc. Threats of criminal enforcement, etc.

Introduce them because you want to help, but you're not in a legally strong position to collect fees.