Be Careful Using a “Matchmaker” to Help You Raise Money
Entering Into a Relationship With a “Matchmaker” May Pose Risks
There are an increasing number of online “matchmaker” services that “find” venture capital and angel investors for entrepreneurs. The characteristic that these “finders” all share is their preferred method of being compensated. It is a fee that usually consists of a percentage of the money raised.
As this report “The Search for Venture Capital: Beware of “Finders” Operating As Unregistered Broker-Dealers” prepared by the law firm DLA Piper points out, there is potential liability for Start-Ups. The potential problem with using a finder is that the finder may be operating as an “unregistered broker-dealer” of private securities.
NOTE: This is an Adobe PDF file. Download the Report in PDF