The Cost of a Fundraise

Hello, this is Hall T. Martin with the Startup Funding Espresso -- your daily shot of startup funding and investing.

Fundraising will take time and money to complete.

For the early stage, it’s primarily the time spent.

Later-stage fundraising will cost money as well.

Here are some key costs to consider when planning a fundraiser campaign:

For those using a broker to raise funding, they take 5 to 8% of the raise and an additional 2-3% for expenses, often in the form of a retainer.

Short-term loans in the venture space cost around 25% of the funds raised.

A portion of this is paid in cash, and some in equity.

Those who use factoring to fund product builds will pay around 15% of the funds raised.

For crowdfunding raises, the cost of social media and email marketing ranges from 10-20% of funds raised.

Legal fees for papering the deal cost around 1% of the funds raised.

A $2M funding will cost around $20K in fees.

While in the past, the investors may have paid the legal fees to paper a deal, it’s more common today that the startup will pay for it.

A savvy investor will also know that the startup is paying for the fees out of the funds raised.

Consider these costs in raising funds for your startup.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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