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FUNDING RESOURCES: Venture Consultants
These are professionals who raise money for companies for a living.
How They Work: They receive an up-front fee and a percentage of the money they raise. They usually receive 4% of the first $1 million, then the percentage decreases based on the amount of money raised. Their up-front fees are usually subtracted from the money raised and, in many cases, they will take part of the fee in company stock. This usually makes both investors and the owner of the business happy because it conserves cash and shows true commitment on behalf of the money raiser.
Management should have only one person responsible for raising new capital: the chairman/CEO or possibly a board member, if the company has board members. Often, too many members of management become involved in raising capital, distracting them from sales and business operations.
Finally, remember that giving away equity can be more expensive than borrowing money in the long run, so be careful whom management allows to invest and how much stock the company sells.