Finders Fee Agreement For Raising Capital Template for the United States

When your company needs to raise capital, engaging a finder can significantly expand your network of potential investors. A Finders Fee Agreement For Raising Capital creates the legal framework for this relationship while ensuring compliance with complex U.S. securities regulations. This agreement protects both your company and the finder by clearly defining permitted activities, compensation terms, and regulatory boundaries.

When do you need this document?

You need this agreement when your company plans to engage individuals or entities to help identify and introduce potential investors for capital raising activities. This is particularly common during private placement offerings, seed funding rounds, or expansion capital raises where personal networks and industry connections are valuable. The agreement is essential before any finder begins making investor introductions to ensure all activities comply with federal securities laws. You also need this document when working with consultants, advisors, or other intermediaries who will receive compensation based on successful capital raises, as their activities may trigger regulatory requirements without proper documentation.

Key legal considerations

The most critical consideration is avoiding unlawful broker-dealer activities that would require SEC registration. The agreement must carefully limit the finder's role to introductions and relationship facilitation, prohibiting activities like negotiating terms, handling investor funds, or providing investment advice. Compensation structures require particular attention, as success fees based solely on capital raised may suggest broker-dealer activity, while flat fees or retainers are generally safer. The agreement should include specific disclaimers about the finder's role, require disclosure of the finder relationship to all prospective investors, and establish clear boundaries around permissible communications. Additionally, the document must address confidentiality obligations, as finders will likely access sensitive company information during the capital raising process.

Legal requirements in United States

Under the Securities Act of 1933 and Securities Exchange Act of 1934, finder activities that constitute broker-dealer functions require SEC registration unless an exemption applies. Section 15(a) of the Exchange Act specifically prohibits unregistered persons from engaging in securities brokerage activities. Your agreement must ensure the finder's role falls within recognized safe harbors, such as the "finder's exemption" for passive introductions without ongoing involvement in the transaction. State Blue Sky laws impose additional requirements, with many states requiring notice filings or registrations for finder activities within their jurisdictions. If your capital raise relies on Regulation D exemptions, particularly Rules 506(b) or 506(c), the agreement must ensure finder activities don't jeopardize these exemptions. The document should also address potential FINRA oversight if the finder has any securities industry affiliations and include provisions for compliance with any applicable state-specific finder regulations.