A Finder’s Agreement is a contract between a company and a third-party finder who assists the company in locating potential investors, clients, or other business opportunities. The agreement typically outlines the scope of the finder’s services, the compensation to be paid to the finder, and any other terms and conditions of the relationship between the parties. Finder’s Agreements are common in the startup world, where companies may need help finding investors or strategic partners to help grow their business. It is important to note that finders who are not registered broker-dealers may be subject to securities laws and regulations, and the agreement should be structured accordingly.
The standard for a finder’s agreement is typically 5% of the investment amount received plus a warrant coverage of 5% of the shares issued to the investors the finder introduced. This is often referred to as “5%+5%.”
While It’s true that a 5%+5% finder’s fee is a common standard in the industry, but it can vary depending on the nature and complexity of the deal, as well as the experience and reputation of the finder. Some finders may charge higher fees for more specialized services or for particularly large deals, while others may be willing to work for lower fees in exchange for other benefits or opportunities. Ultimately, the terms of a finder’s agreement will depend on the negotiations and agreements between the parties involved.