Winterchase said:
I recently receive a rather nice check simply for having put a producer in touch with a qualified investor who apparently came through. I have no idea how much was involved, therefore, I have no idea what the percentage might have been or if it might not have been just an arbitary amount. It kind of stunned me, I guess because I didn't expect it, it was too easy, that and the producer saw fit to reward me with the “finders fee” (if that's what it's called). That was the real surprise and proved to me that not all producers deverve the reputation they have..
Question: obviously there are people who do that for a living, but does anybody know what the rules are, or if there are any rules? How it’s done? Anything? Suggestions? Advice? Ways to protect myself? As is, it pays a whole lot more than writing and if I can get anywhere from 1 to 10% of what I can raise, I'll do it all day long.
These gentlemen probably paid you the low end of the scale as a way of protecting themselves against a suit by you in the event they paid you nothing.
Whenever and where ever we encounter folks who are engaged in dealing with financing, in real estate, movies, new business ventures, new product developments ... whatever ... you will find that everyone in the loop takes a cut as the money passes through their hands or changes hands because of their actions. This has become par for the course. Many different terminologies are used, "finder's fee," "brokerage fee," "service fee," and so on, but the one constant is that when money changes hands or is invested, someone is getting a cut, and usually more than one.
Rates vary all over the map but depend in large part on the difficulty associated with getting the money, which is a function of the risk associated with the investment. High risk ventures usually command bigger brokerage fees; low risk ones earn smaller fees.
It's all "get what the market will bear," so there are no rules per se. There's the experiences, and it is usually hard to come up with hard data in that arena 'cause people don't broadcast it.
If you're in a position to arrange financing for movie makers you should indeed be able to make a good living doing it charging a brokerage fee. Generally, I'd think such fees would run between five and ten per cent of the amount of financing provided. Start at 15 per cent and come down when people scream "That's too high!" Also, and still generally, the bigger the number the lower the rate. But the risk factor plays in the equation too and may tend to push a rate higher; another factor is how badly the guy wants the investment financing ... the more he wants it, the more he'll pay to get it.
You probably can learn more by doing some research on the topic.
Laissez faire capitalism, baby ... that's the name of this game!
Enjoy!
