融资中介FinancingAgents

融资中介
FinancingAgents
fromStartupCFO
Ioftenspeakwithentrepreneurslookingforhelpinraisingmoney.Ifyou'rea1sttimeentrepreneur,don'thaveaCFOanddon'thaverelationshipswithinvestors,wheredoyouturn?Onesourceoutthereistheagent–apersonorfirmthathelpsyouraisemoneyinexchangeforacut.
Howitworks
Agentsusuallygetacommitmentfeeupfront.Thiscouldbemonthlyoronetime.Theirbigpayoffcomeswhentheyactuallyclosemoneyforyou.Theykeepa%forthemselves.This%varies.Ifyou'reraising$3Masanexample,you’dprobablypay5%.
BuyerBeware
Perhapsit'sbecauseI'vespent9yearsintheVC-backedstartupspace,butI’mnotafanofagents.Ifyou'reinhi-techandlookingtoraiseventurecapital,you'reexpectedtobeabletoopendoorsandmeetinvestorsyourself.ThisisoneofthemanytestsyougothroughtoproveyourselfworthyofVC$.
Therearesomerarecircumstanceswhereusinganagenttoraise$forasmallbusinessmakessense.Ifyouhaveaverynicheofferingandhencewouldappealtoanichegroupofinvestors(i.e.perhapsyouhaveavineyardandwanttotapintofellowwineloverswhoshareyourpassion).But,forthemostpartitdoesn'tmakesense.
WhenItalkaboutagents,Iamnottalkingabouttrueinvestmentbankers.Whileanyonecancallthemselvesabanker,realbankerswhoworkatknowndealersonlycomeintoplaywhenyourcompanyisbig.Noreali-bankerwouldeverstooptocomedowntohelpanewstartupraise$(atleastIhaven’tseenonesincetheSummerof2000).
Instead,youseeallmannerofcharacters.Someareprobablylegitimate,well-meaningandwellconnectedpeople.However,somearealsoouttoscrewyou.They'lltakeyourupfrontfee,promiseyoutheWorldanddelivernothing.
Youralternatives
Sowhatdoyoudoifyouwanttoraise$andtrulyneedhelp?
Network:Speaktoaccountants,lawyers,otherentrepreneurs.Inmostcitiestherearerarelymorethantwodegreesofseparationbetweenpeoplewhoneedmoneyandpeoplewhohaveit.
RentaCFO:IfyourbusinessistoosmalltowarrantafulltimeCFO,consideraparttimeone.Lookforsomeonewhocandomorethanbalancedebitsandcredits.Lookforsomeonewithexperienceinyourspace.Why?Herinvolvementwilladdcredibilityandendorsementtoyourbusinessandshewillpresumablyhaverelevantcontactstohelpyouraise.
UsinganAgent
Ifyoudoconcludethatitmakessensetohireanagent,proceedwithcaution.First,whereapplicable,checkouttheperson'scredentials.InsomeprovinceshereinCanada,ifyouwanttohelpacompanyraisemoneyyoumustbecertifiedbytheSecuritiesauthoritiesasalimitedmarketdealer.Thiswillgiveyousomecomfortthatthepersonisatleastcommittedtoandqualifiedforthiswork.
Moreimportantly,referencecheck.Whohasthispersonraised$for?Howdidhedoit?When?Hasheworkedinyourindustryrecently?Reallydigintohisexperience.
Finally,insistonagameplan.Thelastthingyouwantissomeonewhowilltakeyourstoryandshopittoanyonewithapulse.I'veheardofagentsshoppingstartupplansandcarpetbombingeveryVCwithainfo@e-mailblast.Thatwillneverwork.Yourfundraisingprocessshouldbetargeted.Youragentshouldbeabletotellyoupreciselywherehewillgotoraise$andshouldgiveyouweeklyupdates.
Bottomlineforme–inmostcircumstancesIstronglyrecommendthatyouavoidusinganagent.Ifyoumust,pleaseproceedwithcaution.