Who can introduce you to investors? Brokers, portals and finders

An investor introduction is the act of connecting a prospective investor with an issuer seeking capital. In US securities law, a person who regularly helps effect securities transactions for others may be a broker required to register under Exchange Act Section 15(a). An introduction alone is not invariably brokerage; compensation tied to a closing, active solicitation and negotiating terms change the analysis. “Finder” is a description people use, not a universal federal license or exemption.

What does Section 15(a) actually regulate?

The Securities Exchange Act's Section 15(a)(1) generally makes it unlawful for an unregistered broker or dealer to use interstate commerce to effect transactions in securities, or to induce or attempt to induce their purchase or sale, except as allowed by law. The Exchange Act's Section 3(a)(4) defines broker as someone engaged in the business of effecting securities transactions for the account of others. A founder selling their own company's securities ordinarily acts for the issuer, not on behalf of someone else's brokerage account. A paid outside intermediary serving multiple companies is a different fact pattern.

The SEC's Guide to Broker-Dealer Registration poses practical questions: Does the person solicit investors? Participate in negotiations? Make recommendations? Handle funds or securities? Receive compensation related to transaction outcome or size? Hold themselves out as a securities intermediary? The answers combine into a factual analysis, not an online multiple-choice score with an automatic pass. Registration can also implicate FINRA membership, associated-person supervision and state requirements.

There is a reason regulators care. A broker operating under a registered firm is subject to rules on supervision, records, communications and conflicts; payment for moving an investor toward a purchase creates incentives that a casual introduction does not. A startup facing runway pressure may be especially vulnerable to someone who promises a fast raise while concealing conflicts or pushing an unsuitable security. Equally, not every person who shares a founder's profile is in the business of selling securities. The law asks what the person actually does.

When does a warm introduction become broker activity?

Imagine a friend emailing: “Alex, meet Priya; she builds battery technology and you both work on supply chains.” The friend receives no payment, makes no investment recommendation and does not join a negotiation. That is different from someone buying a database of angels, sending a pitch to hundreds of strangers, arranging investment meetings, answering return questions, negotiating allocations and receiving a portion of each successful close. The second pattern presents multiple signs of brokerage even if the agreement calls the person a “community ambassador.”

Borderline cases exist. An adviser may make one introduction and receive a disclosed fixed fee unrelated to whether an investment occurs. A consultant may draft pitch materials but never contact investors. An investor may introduce fellow investors without any payment. An employee may be helping the issuer sell its own securities. Different facts lead to different analyses, and state finder laws can add restrictions even where federal law does not clearly demand registration. The SEC guide lists “finders” among people who may need to register; it does not announce that every connection is illegal.

Founders should avoid reasoning backward from labels. “Referral,” “advisory,” “BD partner,” “network access” and “marketing support” describe an invoice but do not change the underlying activities. Ask who identifies prospects, who speaks about the securities, whether the intermediary evaluates investor fit, whether they follow up to induce a purchase, who negotiates, and what triggers compensation. Write these answers down before a contract is signed. A lawyer can then examine the actual work instead of guessing from a job title.

The fundraising exemption matters too. If a startup is relying on Rule 506(b), general solicitation is prohibited; an outside person cannot cure public cold outreach by describing it as private “relationship building.” A 506(c) issuer can solicit publicly only if its purchasers satisfy that rule's accredited-investor and verification conditions. Neither exemption itself licenses an unregistered person to act as a broker. Securities-offering compliance and intermediary compliance are two separate questions.

Why does a success fee raise a particular concern?

Suppose a contractor says, “I take 4% of every investment that arrives through my contacts.” The percentage is hypothetical, not a market price or legal safe threshold. It directly rewards getting investors to buy, and the SEC guide specifically asks whether compensation depends on a deal's outcome or size. A bonus payable only after a closing, a fee per investor who purchases, or a share of the securities sold creates a similar concern even if no percentage appears in the agreement.

Transaction-based pay is often described as a hallmark of brokerage because it motivates sales efforts. It is not the sole legal element: the absence of a commission does not make solicitations or negotiations lawful, and the mere existence of compensation does not resolve a complex exemption. Look at the whole engagement. Someone paid to promote a private placement and shepherd prospects through subscription paperwork is performing different work from a designer paid to improve a pitch deck.

A registered broker-dealer may be able to charge transaction-based fees within the rules governing its business and supervision. A funding portal under Reg CF has its own permitted compensation framework but cannot make investment recommendations or pay unregistered people based on sales in violation of its restrictions. The founder's impulse to “pay only if we raise” is economically understandable; it cannot substitute for checking the payee's legal status and permitted activities.

Conversely, a flat monthly retainer is not a legal invisibility cloak. If a consultant earns a fixed fee while cold-calling prospects, urging them to buy a particular SAFE and negotiating terms, the services themselves may be broker activity. Even a fee described as “fixed” can be economically contingent if it becomes due only at close or varies with capital raised. Contract drafting must reflect the real workflow, not disguise its incentives.

Did the SEC legalize unregistered finders in 2020?

No. In October 2020, the SEC published a proposed exemptive order for two tiers of natural-person finders under specified conditions. In the proposal, Tier I would have been limited to one connection for an issuer in a 12-month period and no contact beyond providing information; Tier II would have had a larger role with disclosures and investor acknowledgments, subject to detailed limits. It was explicitly a proposal, not a rule founders could simply invoke. The SEC announced it as proposed relief.

As of this article's September 2026 review, do not treat the proposed Tier I/Tier II descriptions as an adopted, generally effective federal safe harbor. An SEC commissioner said in July 2025 that the proposal was never adopted; a March 2026 petition still requested new relief. A search result summarizing those tiers without the word “proposed” is hazardous. Some narrow SEC staff no-action positions exist on distinct facts; a staff letter to someone else is not a personal license. The scope of any applicable federal exclusion, staff position or state finder provision requires specific legal analysis, not a one-line internet shortcut.

The proposal's history also explains why broad claims about finders are suspect. The policy tension is real: small companies need access to networks, but paying people to sell securities without supervision can expose investors and issuers to abuse. Commentators disagreed over the appropriate balance. Founders should seek current advice, rather than assuming a future rule has already solved that tension or that informal market practice overrides the Exchange Act.

How is a registered placement agent different?

A placement agent is commonly a broker-dealer, operating through registered and supervised personnel, that assists an issuer in placing a private offering. Engagements can include planning the distribution, contacting suitable prospects, coordinating diligence and helping manage subscriptions. The agent's role and compensation should appear in an engagement agreement and offering disclosures as applicable. Broker registration is not a guarantee that investors will fund the round, that the terms are favorable, or that the issuer can dispense with its own counsel.

Before appointing anyone, ask for the registered firm's legal name and registration identifiers, the name and registration of the individual doing the work, the activities the firm has agreed to supervise, conflicts, fees, exclusivity, tail provisions and termination rights. FINRA BrokerCheck provides public firm and individual records. A person's earlier employment at a well-known bank is not proof of their present registration. A consultant claiming that a registered broker-dealer “backs” their activity should explain the precise contractual and supervisory relationship; a distant logo is not enough.

When does a startup need an agent? There is no universal rule that a private issuer must hire one to sell its own securities under a valid exemption. A complicated outreach process or a large institutional placement may benefit from a properly registered professional. Early-stage founders often raise through their own permissible outreach and counsel-led documentation. The relevant decision is not “am I too small?” but “what activities are proposed, who will do them, and under which offering and intermediary rules?”

Issuer employees raise their own questions. Exchange Act Rule 3a4-1 supplies a conditional nonexclusive safe harbor for associated persons of an issuer, including conditions related to statutory disqualification, transaction-based compensation and duties. It is not a general permit to give employees commissions for selling startup stock. An outside consultant does not become an issuer employee merely because a founder issues them an email address. Have counsel assess real relationships, especially if anyone's compensation changes with investments sold.

What can a registered Reg CF funding portal do?

Regulation Crowdfunding has its own intermediary architecture. Securities offered under its framework must be transacted through an SEC-registered intermediary that is either a broker-dealer or a registered funding portal and FINRA member. A funding portal is not a free-floating investor-introduction service for any private round; its tailored registration exists for qualifying Reg CF transactions. For the offering mechanics, read our Reg CF guide alongside current rules.

The Exchange Act's funding-portal definition bars a portal from offering investment advice or recommendations, soliciting purchases or sales of securities displayed on its platform, compensating employees or agents based on sales or prohibited solicitation, and holding investor funds or securities. Investor money follows rules involving a qualified third party; the portal cannot simply collect checks into its own account. A registered broker-dealer intermediary may operate under a different set of permissions and obligations. Neither type is synonymous with a “finder.”

Rule 402 identifies activities compatible with funding-portal restrictions. A portal may decide whether and under what terms to list an eligible issuer while meeting the other crowdfunding rules. It may give issuers assistance with offering structure and documents. It may provide investor discussion channels under conditions, including disclosure when a commenter is a founder, employee or compensated promoter. It may offer search, sort and categorization tools based on specified objective criteria. These are operational permissions within a regulated offering, not an exemption for a general-purpose startup directory to execute securities sales.

Can a portal highlight promising issuers under Rule 402?

It can highlight offerings using objective criteria if those criteria are reasonably designed to cover a broad selection, applied consistently, clearly displayed and not influenced by special or additional compensation for featuring an issuer. Rule 402 offers examples such as security type, issuer geography, industry, investment commitments and progress toward an offering target. It specifically bars highlighting based on the advisability of investment. Search and sorting tools similarly cannot include an assessment of an issuer's management, business plan or risks as an investment judgment.

For example, “technology issuers in Oregon” is a descriptive category. “Our analysts' top five safest technology investments” is a recommendation, not a neutral criterion. A portal may advertise its existence and identify offerings on the basis of objective criteria under the rule's conditions; a paid “best deal” ranking is not made lawful by calling it discovery. Additional anti-fraud duties still apply. Rule 402 expressly says that activities failing one of its specified conditions do not automatically create a presumption of violation: what matters is the complete law and facts. It is therefore inaccurate both to call every editorial arrangement permissible and to pronounce every deviation automatically illegal.

Referral compensation is particularly specific. Rule 402(b)(6) permits a portal to compensate a third party for referring a person to the portal under conditions: the referrer must not supply personally identifiable information about a potential investor, and compensation to someone other than a registered broker or dealer cannot be based, directly or indirectly, on a securities purchase or sale through the portal. This is not permission to pay unregistered promoters a per-investor commission. Rule 402 also sets conditions for arrangements with registered broker-dealers. If someone offers to “refer subscribers” to a portal for a cut of each investment, read the rule rather than a marketing deck.

Does the choice of fundraising exemption change the intermediary rules?

Yes, though not in the simplistic sense that one exemption abolishes brokerage law. Reg CF requires a registered intermediary for the securities transaction. Under Rule 506(b), a founder conducting a private placement can seek direct permitted introductions, but cannot publicly advertise the securities; paid third-party solicitors still raise broker questions. Under Rule 506(c), public solicitation is possible with accreditation verification, but an outside success-fee fundraiser is not magically licensed. Under Regulation A, still another set of offering and distribution rules applies. The founder should design the whole pathway, from discovery through sale, before outsourcing outreach.

A hypothetical illustrates the difference. A product company posts educational updates and speaks with interested angels about its roadmap. Later, it retains a licensed placement agent to market an appropriately documented private offering. Alternatively, the company may choose Reg CF, prepare required disclosures and transact through a registered portal. Neither course retroactively makes an earlier unregistered consultant's success-fee campaign compliant. Nor does every public mention of a startup constitute an offer of securities. What was said, by whom, to whom and when matters. Our testing-the-waters guide covers the distinction between gauging interest and taking binding investment commitments.

A founder planning an SPV should not assume one cap-table line eliminates intermediary concerns. Someone assembling a vehicle, advertising it, advising participants and being compensated on its subscriptions may have independent broker, adviser or investment-company issues. The SPV explainer describes the structure; lawyers should assess how that structure is marketed and operated. Similarly, investor eligibility under Rule 501(a) does not provide a securities-sales license to the person introducing them.

What happens if an unregistered broker participates?

The possible consequences depend on facts and law: regulatory enforcement, injunctions, penalties, problems with commissions, investor claims and difficulties in later diligence. It is unwise to promise either “nothing will happen” or “the whole round is automatically void.” A later investor may ask who found purchasers, how they were paid and whether the offering documents accurately disclosed that relationship. Cleaning up an undisclosed commission after securities have been issued is much harder than reviewing a proposed arrangement before outreach.

Exchange Act Section 29(b) says, in specified circumstances, that a contract made or performed in violation of the Exchange Act is void as regards the rights of the person who violated the provision and certain knowing successors. Its wording, exceptions, available remedies and the necessary connection between violation and contract have generated case-specific judicial analysis. A court may treat it as creating a rescission or avoidance remedy under applicable conditions, not a switch that instantly cancels every investor's share or all company contracts. Claims may face time limitations and other defenses. Counsel should review the affected agreements and jurisdiction.

For example, if an unregistered intermediary seeks to collect an allegedly unlawful placement commission, Section 29(b) questions may arise concerning the engagement contract. Whether the investor's separate subscription agreement can be challenged is not answered merely by showing the intermediary was unregistered. Other securities-law claims might also be raised on different facts. Do not instruct an investor to stop performing a contract or promise a refund based on this article. Prompt legal review is more useful than an automatic-void slogan.

How should a founder evaluate a proposed introduction agreement?

First, document the actual service in plain language. Will the person publish a directory, send one private introduction, distribute offering materials, answer securities questions, screen investors, negotiate, coordinate signatures or take custody of money? Second, identify how and when they are paid: retainer, sale-contingent payment, percentage of proceeds, warrants, equity, or indirect benefits. Equity can be transaction-related compensation too. Third, check current registration and supervision if brokerage activities are proposed. Fourth, ask counsel to review federal and state issues together with the proposed fundraising exemption.

No row guarantees a result. The first two can become problematic if the unpaid friend evolves into an investment pitchman or the designer starts offering financial advice. The third is not repaired merely by changing 4% to a big flat retainer while keeping the same investor-solicitation job. The fourth needs genuine registered-firm oversight, not a ceremonial name on paperwork. A good diligence file contains the signed agreement, the intermediary's actual outreach, any disclosures and an explanation of why the selected route fits.

Where does OBridge draw the discovery boundary?

OBridge is an early-access network for discovering startups and people, not a broker-dealer, registered funding portal or transaction venue. Its Investable feature is intended as a nonbinding signal of interest without amounts. It is not a pledge to invest, a securities order, an acceptance of an offer or evidence that an investor is accredited. A match or introduction does not represent regulatory clearance, diligence, suitability or a promise of financing. Founders and investors must arrange any later securities activity through an appropriate lawful process with qualified advisers.

That separation matters beyond legal labels. Discovery can help two people find each other without pretending a product has completed the work of a placement agent, verified purchaser eligibility or collected funds. How any particular service is classified depends on its actual operations, compensation and communications, not on a paragraph declaring it a “network.” OBridge does not guarantee that it or a user is compliant in every jurisdiction. If a founder proceeds to offer securities, the founder needs a documented exemption and appropriate intermediaries where required.

Frequently asked questions

Can my friend make one unpaid investor introduction?

A simple unpaid personal introduction, without solicitation, negotiation, advice or a business of arranging securities transactions, is different from acting as a broker. Facts and applicable state law still matter.

Does a success fee automatically make someone an unregistered broker?

No single factor decides every case. Compensation tied to the size or success of a securities transaction is a strong indicator of broker activity; review all activities and applicable law before agreeing to it.

Is a flat-fee fundraising consultant always exempt from broker registration?

No. A genuinely fixed fee removes one warning sign but solicitation, negotiations, recommendations and regular securities-placement activity can still require registration.

Did the SEC adopt the 2020 finder exemption?

No. The SEC's October 2020 Tier I and Tier II finder framework was a proposed exemptive order, not a generally effective federal registration exemption; do not rely on it as current law.

Can a funding portal recommend the best Reg CF startup?

No. A registered funding portal cannot give investment advice or recommendations. Rule 402 permits consistently applied, disclosed objective highlighting and search criteria within conditions; it does not authorize rankings based on investment advisability.

Can a registered funding portal handle investor money?

No. Funding portals cannot hold, manage, possess or otherwise handle investor funds or securities; Reg CF uses a qualified third party under the applicable rules.

Does Section 29(b) automatically cancel my entire fundraising round?

No. Section 29(b) can affect contracts whose making or performance violates the Exchange Act, subject to the statutory language and judicial interpretation. It does not automatically unwind every securities sale or every contract after an unregistered introduction.

How can I check a placement agent's registration?

Ask for the firm and individual's legal names and registration details, then check FINRA BrokerCheck and the SEC's broker-dealer records; confirm the proposed activity falls within the firm's supervision and applicable state requirements.