Is It Legal to Pay Someone a Commission to Find Investors?
By Joel Arberman, founder of Prepared to Raise · 17 companies taken public, 30+ private placements prepared · Reviewed October 21, 2026
Why commissions are the problem
Federal law requires anyone in the business of effecting securities transactions for others to register as a broker-dealer, and states have similar rules. Regulators look at what the person does and how they are paid. Soliciting investors, recommending the investment, negotiating terms and handling money all point toward broker activity. But the single strongest factor is transaction-based compensation: a fee that grows with the amount raised or is paid only if money comes in.
So a friend who introduces you to an investor and receives a thank-you dinner is in a very different position from a consultant paid 5% of everything they bring in.
What can go wrong
- Investors may be able to undo the deal. Contracts made in violation of the broker registration rules can be voidable, and investors who lose money have used this to demand their investment back.
- Regulators can act against the finder and, in some cases, the company.
- Diligence finds it. Form D asks about sales compensation. The lawyers for your next investors, an underwriter or an acquirer will ask who was paid and how.
- Your credibility suffers. Investors who learn that the person who brought them in was paid a percentage start to wonder what else they weren't told.
Legal ways to get help raising money
- A registered broker-dealer acting as placement agent. They can be paid a percentage and often take warrants as well. Check registration on FINRA BrokerCheck.
- Fixed-fee advisers who prepare but don't sell. Lawyers, accountants and firms like ours are paid for work, not for money raised, and do not solicit or introduce investors.
- Your own network. Founders, officers and existing investors introducing people they know, unpaid. How to raise from people you know.
- Advertising under Rule 506(c) to accredited investors. 506(b) vs 506(c).
- A registered funding portal under Regulation Crowdfunding.
Where the finder exemption stands
In October 2020 the SEC proposed a limited exemption that would have let individual finders take transaction-based pay for introducing accredited investors to private companies, under conditions including no general solicitation. It was never adopted. Commissioners and the SEC's small-business advisory committee have since voiced support, and the SEC's Spring 2026 regulatory agenda lists the regulatory status of finders as an item under consideration. Until a rule is final, current law applies. A few states have their own finder rules, which do not override federal law.
Related questions
Can I pay the finder in equity instead of cash?
Equity is still compensation. If it depends on the amount raised, the same problem applies.
Can my employees or officers raise money?
Yes, within limits. A safe harbor covers company officers and employees who are not paid commissions for sales and meet other conditions. Check with counsel before giving anyone a role in selling.
Can I give an existing investor a referral bonus?
A payment tied to new investment is transaction-based compensation, whoever receives it.
What if I already paid a finder?
Talk to securities counsel before your next raise. It is easier to address now than in the middle of diligence.
How do your fees work?
Fixed. Prepared to Raise charges a set fee for each package, the same whether you raise $200,000 or $2 million, and does not solicit or introduce investors.
Where to start
Compare our fixed-fee packages, or see how they differ from a broker or a lawyer on the Compare page.
Prepared to Raise is a service of Meraki Partners, LLC. This article is general information, not legal, tax or investment advice, and not an offer to sell or a solicitation to buy any security. Meraki Partners is not a broker-dealer, funding portal, investment adviser or law firm.