Distribution Partnerships · Investor relationships

Investor and Distribution Partner Conflict?

Jesse Guglielmo

March 18th, 2015

Let's say Firm XYZ is on your cap table. They also happen to have relationships with customer targets that are ripe for introductions. For those intros or any sale opp through their network of contacts and clients, they would want a rev share for any closed sale that was a result of their connection to your company's goods/services. Is there a conflict of interest to be an investor AND have a rev share for marketing distribution? If so, what? And does the order of events matter...investor first vs partner first? Very interested to hear the opinions. Thanks in advance for your insight.

Anonymous

March 19th, 2015

If XYZ wants to sell something for you, sign them up to your standard reseller agreement.  
If XYZ (or anyone else for that matter) wants to be paid for introducing you to a potential customer, thank them politely for the offer, but decline.  
Even if you manage to close business with the lead -- which I bet you won't --, you'll spend more time and energy managing the relationship with XYZ (which will sour because of your not closing a huge deal) than the lead was worth.
(Sorry if I sound jaded.  Good luck.) 

Lane Campbell Lifelong Entrepreneur

March 18th, 2015

It depends entirely on whatever line of business firm XYZ is engaged in.  It's legal in some professions to earn a commission but in others it's not.  Check with an attorney in your state to clear you.

Jesse Guglielmo

March 19th, 2015

Appreciate the insight!  And I prefer it real & direct, thank you!

JG