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The lowdown on using a VC’s agent to fundraise for your startup
- A VC agent is a person who acts independently of a Venture Capital firm and helps in connecting companies who are raising funds with investors.
- VC agents give VCs the opportunity to actively search the market for investment propositions. VC agents protect the future deal flow of VCs.
- VC agents typically only get money when a deal goes through and it can be a substantial commission.
- VC agents provide the connection between VCs and companies and can also help the VC understand the proposition that a company offers.
- VC agents charge a success fee based on securing investment that typically varies from 5% for smaller investment amounts and tails down to around 1% for large amounts.
- A business or startup should have an agreement in place with the VC agent, which should safeguard the reputation of both parties and should also include provisions such as mutual nondisclosure agreements and specific arrangements of payment milestones.
- Founders and CEOs should make use of their skills, connections, and knowledge as VC agents can act as allies in their fight for funding.
- Due diligence can and should be done on VC agents to find out about their professional experience and how they came to be an agent.
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