First off, in the US, it’s illegal to have someone get a commission for sourcing capital for you or because of an introduction to an investor unless they have a broker-dealer license. So if you were to structure a compensation package, it should not be tied directly to the money raised. But to a proxy metric -- like meetings arranged.
More importantly, however, if a VC receives a pitch for a startup through a broker, it sends a very strong red flag to the VC and will hurt your chances of raising b/c the VC’s know the broker’s are compensated on commission and not looking out for the VC’s best interests.
What is best if you have someone that wants to get compensated for brokering connections is to have them invest in you. That aligns all incentives and they should be naturally motivated to get you cash to fundraise. It also transforms a red flag into a green flag -- if an investor gets an email from someone who put their own skin in the game and funded you, it makes you look like an attractive investment.
Most investors should want to do that regardless of getting extra compensation.
But if you do have an individual that wants / deserves extra compensation, you can give them extra equity on top of the equity they bought through an advisor agreement or warranty coverage. Traditionally, the sweetener for an investor who’s going beyond the call of duty is 10% of the shares their money bought. So if they put $100k in at a $10m cap -- and buy 1% of shares -- you’d give an extra 10 basis points of equity.
If you do want to compensate them without having them invest -- which we would strongly caution against -- you want to strike the advisor agreement with milestones that Alchemist recommends. That is, decide how much equity they should get, and have at least half be based on achieving milestones, and up to half on time spent. So if someone says they can connect you to investors, maybe give them an agreement where they are earning 3 basis points for time spent over the next quarter on the company, and an additional basis point for every 5 meetings they set up, capped at 6 basis points total. Or some equivalent arrangement.