Should You Have To Pay Fees To An Angel Investor?

[jigga18]

[h=2]I've been pitched a couple of offers from investment firms in the UK. But the catch is paying fees in order for these investors to invest in my company. I don't understand why I would have to pay fees for somebody to invest in my company. For those that have had experience with angel investors, I want to know if this is par for the course or is this something I should steer away from?[/h]

 

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[snowbank]

No idea what this means, but I wouldn't

 

[jaywolf]

That is definitely suspect. There's no reason you should have to pay money or fees to have an investor invest in you, I didn't. If someone is interested in your idea they will come to you wanting to give YOU money for an equitable stake in the company, but they wouldn't ask you for money upfront.

 

[CosmicMind]

WTF!? Hell no! Run away and do not look back. That sounds like a SCAM.

I have never dealt with investors. But this makes zero sense. Tell them to F**K OFF.

Listen to your gut/instincts. If you are still unsure: do a very detail investigation.

 

[healthstatus]

You never say how much it is. Some may have a small token fee to sort the I have a great idea but don't really want to work at it crowd from the I will do anything to make this work group that is worthy of funding. It should be really small, barely 3 digits kind of thing.

If they have truly come to you with an investment plan and want some front end money, then I would run.

 

[CommonCents]

They are probably acting as agent status, telling you they'll hook you up with investors. Most of them operate as 'consulting' and the payment would be a % success fee, no upfront payment. It's done all the time. Any upfront fees could be for preparing your business plan, offering, doing projections etc... There is a big hole in the small/med business financing area as the SEC wants everyone registered as broker/dealer but smaller/med deals usually don't get pursued at that level. Many go to the UK public markets instead of the US, less restrictive.

 

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[Mouse]

There was an angel group here, and they had a registration fee. I didn't look into it much though.

 

[jigga18]

I decided not to go through with it,
but both companies told me that the fees were for:
Banker Draft Issuance fee
Notary and court registration fees
Legalization of signed Agreement
Filing of signed Agreement
UK money laundering compliance