You probably already know what a broker is. But you might not know how a broker applies to your startup and how best to utilize one to your advantage. That’s where this dictionary comes in.
In case you don’t know what a broker is, that’s OK too. This is a place for learning. There are no stupid questions here at the LawTrades startup dictionary. In fact, we’ll never tell anyone that you read this definition.
So here it goes. A broker is a human person who makes securities transactions for others in exchange for a commission on the sales.
One type of broker of particular interest to startups is the venture capital broker. Like the name suggests, this is a broker who will find investments for you, taking a lot of the heavy lifting and pressure off you in exchange for a fee. They don’t invest in your company themselves, but rather seek out interested parties who would be good candidates.
On an individual level, brokers back in the day used to just be for rich people who wanted to get richer. However, the internet has changed all that with the rise of discount brokers that have made buying and selling stock available to us regular folk too. It’s also changed the amount of time it takes to make a trade. It used to be a long and cumbersome process, but now it happens online in just seconds. The main difference is that discount brokers don’t provide the personalized advice of a full service broker, so you’re kind of on your own in terms of deciding what to invest in (and not invest in).
Brokers aren’t just randos though. They actually have to be certified and maintain a license in order to handle your money. So that should provide some comfort.
Maybe we should hire a broker to get us investors since my dad said no.