The shortcut that will torpedo your fundraising before it starts

I get it. You’re a UK or EU founder ready to crack the US market and raise venture capital from American VCs. The fundraising process looks daunting—hundreds of cold emails, endless pitch meetings, countless rejections. Then someone offers you a solution: a broker or intermediary who knows all the right investors and can make the introductions for you. They just want a small success fee when you close your round.

Sounds perfect, right?

It’s not. It’s a disaster waiting to happen.

Here’s the hard truth: using a broker or intermediary to raise US venture capital is one of the fastest ways to kill your fundraising efforts. Not only will it reduce your chances of success, it could create regulatory problems that follow your company for years.

Let me explain exactly why you need to avoid this path—no matter how tempting it seems.

The VC-Founder Relationship is Sacred in US Markets

American VCs invest in founders first, everything else second. Yes, they care about your TAM, your technology, your IP, and your go-to-market strategy. But what they’re really investing in is you—your vision, your execution ability, your resilience under pressure.

This is why the direct relationship between VC and founder is absolutely sacrosanct in US venture culture. Top-tier VCs want unfiltered access to you from day one. They want to pressure-test your thinking. They want to see how you handle tough questions. They want to understand what makes you tick as an operator and leader.

Any person who tries to get between the VC and founder is doing more harm than good. When a broker serves as the intermediary, VCs immediately wonder: Why isn’t the founder confident enough to approach me directly? What are they hiding? Can they not articulate their own vision?

These questions kill deals before they start.

The SEC Compliance Nightmare

Here’s what most founders don’t understand: In the United States, taking a success fee on venture fundraising requires a broker-dealer license from the Securities and Exchange Commission (SEC).

The SEC views fundraising as selling securities. If someone receives compensation contingent on a successful funding round, they’re acting as a securities broker and must be properly licensed. Very few people have these licenses—and those who do typically work at registered investment banks, not as freelance “fundraising consultants.”

This creates two massive problems:

First, you’re working with someone operating outside regulatory compliance. If they’re taking success fees without proper licensing, they’re violating SEC regulations. That risk doesn’t just sit with them—it can contaminate your entire funding round.

Second, top-tier US VCs will walk away immediately. They have zero tolerance for regulatory issues. The moment they discover an unlicensed broker involved in your fundraising, they’ll pass on your company—no matter how strong your business is. The regulatory risk isn’t worth it to them.

I’ve seen promising companies shut out of funding conversations because they made this mistake. Don’t be one of them.

US VCs Want 100% of Their Capital Going to Growth

Here’s another reality about the US venture market: Top-tier VCs do not want their capital going to brokers. Period.

American investors expect every dollar they invest to fuel your growth—product development, customer acquisition, team building, market expansion. When they learn that a portion of their investment will immediately flow out the door as a success fee to a broker, it fundamentally changes the economics of the deal.

And here’s the kicker: Top-tier VCs don’t need deal flow from brokers. They’re already drowning in opportunities. Most partners view it as their core job to personally source new deals through their networks, industry relationships, and market intelligence. They’re not sitting around waiting for brokers to bring them companies.

When a broker approaches them, they don’t see it as valuable deal flow—they see it as noise.

It Signals You’re Not Ready for the Brutality of Building a Startup

This is perhaps the most important reason, and it’s the one that cuts deepest.

US VCs expect founders to be 100% focused on their company’s top priorities and personally leading every critical initiative. Fundraising is always at the top of that priority list. Always.

Yes, raising venture capital is brutal. It’s grueling, humiliating, and demoralizing. Every founder would love to hit “the easy button” and outsource the process. But here’s what VCs understand: By enduring the brutality of venture fundraising, you’re demonstrating exactly the kind of grit, determination, and willingness to get your teeth kicked in that it ultimately takes to succeed as a founder.

When you hire a broker to do the dirty work, you’re signaling the exact opposite. You’re telling VCs that when things get hard, you’ll look for someone else to handle it. That you’re not willing to personally grind through the most challenging aspects of building your company.

That’s a red flag VCs can spot from a mile away.

What the Experts Say

Don’t just take my word for it. We recently had Maria Palma on the Scaling Stateside podcast—she’s a Partner at Freestyle Capital and has seen hundreds of fundraising processes from the VC side. I asked her directly about startup founders who use brokers to raise capital.

She didn’t mince words: