Referral fees - VC, PE

[statusseeker]

"Look, if you're not an investment banker or in some similar professional capacity, you look like a schmuck for presenting a referral agreement."

You are probably right. But I am going on the notion that XSellSide is a finance guy and not someone's uncle making a call to a hedge fund. Those guys would be ignored by most anyway, so a referral agreement is irrelevant.

Anyway, I'll leave it at the fact that each situation is different. Not knowing enough about this situation, is probably silly to speculate either way.

 

[dfifeshire]

Receiving referral fees may require registration as a broker-dealer entity. Your fee could be viewed as transaction-based compensation. Just a thought.



Edited 1 time(s). Last edit at Thursday, September 7, 2006 at 03:30PM by dfifeshire.

 

[statusseeker]

You can refer once or twice. Once a pattern established that what you are doing is a line up business, you need to be registered.

 

[XSellSide]

I guess $100,000 means different things to different people. Heck, I'd be happy with 5 figures!

Yes, I'm a finance guy and not "somebody's uncle". I've made it clear to both parties that I'm going to do some work with the entrepreneur before passing him off to VC/PE. If I do a great job setting up the handoff, VC/PE will recognize that I�ve added some value in the process. The referral fee should be a no-brainer for them at that point. What not to do is say �give me $50,000 and I�ll give you his name and phone number�. I�d be laughed out of town, obviously. But, I set expectations up from the get-go that 1. I�m going to work this for you and 2. I expect to get paid for said effort. I wouldn�t expect a dollar if I was simply giving a name and number.

I�ll keep you all posted on the situation!

 

[bizmexx]

Referral fee is out of question for me. I am still at my early stage of career, and all the projects I have been throwing to the PEs was out of courtesey. In this way, I made friends with them and the value always lies on Long-term.