Brad Feld has a couple posts up on placement agents responding to reader questions he’s been getting. If you are thinking of hiring an agent to help you raise money, go read them both.
In his first post, Brad wrote:
Many early stage VCs – especially those that are in saturated
geographies and see a lot of deal flow – don’t pay much attention to
deals that are promoted by an “investment agent.” I know a number of
folks who simply “hit delete” on an email (the virtual equivalent to
tossing the physical PPM – the document most agents insist on putting
together – in the trash.) In the early stages, the entrepreneur is by
far the best fundraiser for his company and there is a knee jerk
negative reaction by many VCs against early stage deals that “require”
an agent. At the early stage, an entrepreneur is much better served by
finding an advisor (or set of advisors) or angel investor that has good
VC connections and fundraising experience who can get actively involved
in the company as advisor, board member, consultant, or even chairman.
I have to admit that I have been guilty of the exact behavior that Brad describes for exactly the reasons he articulates. There are a number of good agents in every market and I feel differently about deals they bring to us, but for the vast majority of them, who we don’t know, have no relationship with, its the quickest way to the delete key I know of.