A 5% success fee is worth paying only if the adviser gets a materially better round than the founder would get alone. For most seed and Series A founders in the UK, a flat fee or hourly advisory model delivers the same outcome for less money and with better incentives. On a £1m round, 5% costs £50,000. On a £600,000 round, common for UK seed, it costs £30,000. Lucy Colson runs Capital Studio at a flat £3,000 six-month fee for raises up to £600,000, and 0.5% of the target raise above this threshold, precisely because the maths above rarely favours the percentage model.
What does a 5% fundraising fee actually cost in cash terms?
A 5% success fee on a £1m raise is £50,000 taken straight out of the capital the founder just spent months securing. On a typical UK seed round of £500,000 to £600,000, the fee lands between £25,000 and £30,000. Industry reporting on fundraising intermediaries puts typical success fees between 3% and 7% depending on deal size and complexity, so 5% sits at the middle of the normal range rather than as an outlier. The founder should compare this number against eighteen months of runway, a senior hire, or a product milestone. This is what the fee actually displaces.
Why does a percentage fee create a bad incentive for the founder?
A percentage fee pays the adviser for closing any round, not the right round, because the commission is identical whether the terms are good or mediocre. An adviser paid 5% of whatever comes through the door has no financial reason to push back on a low valuation. The same is true of a bad liquidation preference, or an investor who will be difficult two years later. The adviser is optimising for deal closure. The founder is optimising for company outcome. Those two goals overlap most of the time and diverge exactly when it matters most, on the hard calls about valuation and terms.
Does a broker need FCA authorisation to take a success fee in the UK?
Taking a fee contingent on introducing investors into a private company can fall within regulated activity under the Financial Services and Markets Act, and unauthorised firms have faced enforcement for exactly this. A genuine strategic adviser who helps a founder build the model, the narrative and the process, without being paid to place investors, sits outside this regulatory question. Founders should ask any percentage-fee adviser directly whether they hold FCA authorisation for arranging deals in investments. Get the answer in writing before signing anything.
What does a flat-fee or hourly fundraising adviser cost instead?
Lucy Colson's Capital Studio charges a flat £3,000 fee across the six-month engagement for raises up to £600,000. Above this threshold the fee is 0.5% of the target raise, paid on a six-month payment plan during the engagement. Founders raising up to £600,000 can pay £500 a month across the six months, or £2,700 upfront with a 10% discount. This is one tenth the typical percentage rate and never contingent on the round closing. Lucy Colson has advised 250 plus startups and supported a £3m seed round for C U Health, a UK B2B health-tech company, closed in eleven months. The fee is set and paid during the engagement itself, so there is no incentive to rush a founder into a worse term sheet to trigger payment.
When does a percentage-based fundraising adviser make sense?
A percentage fee makes sense when the adviser is doing genuine deal origination work at scale, meaning warm introductions to dozens of qualified investors the founder could not otherwise reach. This fits growth stage or above, where round sizes are large enough for a smaller percentage to still cover serious work. Investment bankers running $20m plus raises typically charge 7% to 10% with monthly minimums starting around $25,000. This model fits large, complex transactions with M&A-style structuring. It fits seed and Series A far less well, because most of the actual work at this stage is narrative, model and process, not scale investor access.
What should a founder actually pay a fundraising adviser for?
A founder should pay for the work behind a close, not for luck disguised as a commission. This work includes a defensible financial model and an investor narrative built to survive scrutiny. It also includes a clean, complete data room, a target investor list matched to stage and sector, and honest feedback on when a round is not going to close as structured. Lucy Colson's Capital Studio builds all five of those alongside the founder over six months, and pairs directly with the investor data room checklist and the cap table template so the founder walks into diligence with the documents already in order.
How does a founder tell if a raise has stalled versus is just slow?
A raise has stalled, rather than simply taking normal time, when investor meetings keep happening but nobody moves past a first or second call for six to eight weeks running. Slow is normal in UK seed and Series A, where processes commonly run four to six months. Stalled is a signal something structural is wrong, most often the valuation, the narrative, or the target list. This is the moment a founder should get an outside read rather than keep running the same process for another quarter.
FAQ
Yes, industry figures put typical success fees between 3% and 7% of the amount raised, so 5% sits in the middle of the normal range rather than being unusually high.
Legally, only within limits. Arranging deals in investments is a regulated activity in the UK under the Financial Services and Markets Act. Taking a fee for investor introductions without the right permissions carries real regulatory risk for both sides.
Sometimes, particularly for a small pre-seed round inside a founder's own warm network. Once a round needs a real narrative, model, data room and investor targeting, the founder's own time becomes the real cost. This time is usually worth more than a flat advisory fee.
Capital Studio charges a flat £3,000 for a raise up to £600,000, or 0.5% of the target raise above this level. On a £600,000 raise, a 5% success fee would cost £30,000. Capital Studio costs a tenth of this.
No. Every engagement, including Capital Studio, is fee for service. Lucy Colson does not take equity or success fees on the raises she advises.
Under Capital Studio's fee, set and paid during the six-month engagement itself, the founder has paid for the work delivered, not for an outcome outside anyone's full control. Under a pure success fee model, the adviser walks away with nothing regardless of groundwork laid. This is part of why some advisers push hard for a close, even a poorly fitted one.
Considering whether a percentage-fee adviser is the right call for your raise, or want a second opinion on where your process has stalled? Book a strategy session with Lucy Colson to talk it through.