Posts Tagged ‘investor’

Are People Who Claim To Be “VC Brokers” Legit?

Question: We are looking early stage funding for our startup and came across some people claiming to be “VC Broker”. Is there such a concept in the investing world?

It’s highly unlikely that they are legit. I’ve never heard the specific term “VC broker” before and generally don’t think much of people who represent to early stage companies that they “can raise money from VCs for you for a fee.”

There is definitely a category of consultants that prey on early stage companies. These are people who offer to “do something for you for a fee.” You should approach all of these conversations with skepticism if the person wants to charge you money for this.

If they represent themselves as being a conduit to VC financing and you want to explore more, the first thing you should do is ask them for a comprehensive list of all of the people and contact information with whom they have done work for in the previous two years. You should then systematically contact each of these people and find out how things went. In most cases, the mere act of doing this will flush out all of the nonsense.

Interesting, there was a similar question asked in 2007 – see the post Are There Venture Capital Brokers? for a somewhat broader treatment of the topic. There is also a good post up on The Smart Startup site titled Beware of Venture Capital Brokers.

Finally, there is, not surprisingly, a site called VC Brokers. Ironically, the link to “Entrepreneurs” is blank and throws a 404 page not found error.