Navigating Successful Introductions in Investment Projects: Avoiding Common Pitfalls

In the realm of investment projects, introducers and intermediaries play a pivotal role in connecting investors with lucrative opportunities. At Smart Founders, we frequently engage with projects where introducers wield significant influence. However, it is not uncommon for introducers to encounter challenges in securing the rewards they rightfully deserve or incurring unexpected liabilities.

Here are the 7 most costly mistakes that introducers often make and how to avoid them:

1. Missing the opportunity to sign up an introduction fee agreement: Timing is crucial. Without a clear contractual entitlement or a signed non-disclosure and non-circumvention agreement, introducers may rely solely on goodwill for compensation.
2. Not taking control over the terms of your introduction fee agreement: Letting others provide standard form agreements may seem convenient, but taking control over the terms ensures that the agreement protects the introducer’s interests in various scenarios.
3. Signing a contract with the wrong person: Even the best contract is ineffective if signed with the wrong party. Introducers must carefully choose their counterparty, considering both the terms of the contract and the financial standing of the paying party.
4. Taking a fee from both sides, without the express consent of both parties: While receiving fees from both the buyer and seller is acceptable, failing to disclose this to the parties involved may lead to legal obligations and the duty to pay over the fee to the first party.
5. Failing to take VAT into account: Introducers must explicitly address VAT in their commission agreements to avoid bearing the cost, as the legal interpretation under English law typically includes VAT in quoted fees.
6. Committing a criminal offence by carrying on a regulated activity: Introducers need to be cautious when the project involves selling or issuing financial products, ensuring compliance with financial services legislation to avoid legal repercussions.
7. Not understanding your investor: Fundamental to success is understanding the investor’s needs, motivations, and background. Failing to ask pertinent questions may result in a project not moving forward, leading to a missed fee.

In conclusion, successful introductions require meticulous attention to detail and proactive measures to safeguard the interests of introducers. By addressing these common pitfalls, introducers can enhance their chances of securing well-deserved rewards for their invaluable services.

For personalized assistance in training, support creating introduction, feel free to contact us.