What fees should I expect to pay to receive help finding financing or investors for my business plan?
There was a time when most people used the traditional Lehman formula, which was 5 percent for the first million, 4 percent for the second, 3 percent for the third, 2 percent for the fourth, and 1 percent for everything thereafter. You can google Lehman formula to get more on that.
Nowadays, these deals go all over the map. There is little or no regulation, and little or no standards.
And that was true even before the latest financial crisis. It’s even more chaotic right now. Investment activity hasn’t stopped, but it has slowed a great deal, so it’s very much a buyer’s market.
Make sure you have a good relationship with an attorney too. You’re in shark-infested waters. And I’m not saying there’s anything wrong with the specific deal you’re looking at, I’m not an attorney and haven’t even seen it, so how would I know. What I am saying, simply, is be very careful.