A VC in Vacationland

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So you want to raise money for your startup and Uncle Bob recommends a friend of his who is "in the investment banking business". Be careful, be really, really careful when you choose a broker to solicit funds on behalf of your company.

First and foremost, they must be a registered broker in good standing with all regulatory bodies. You can determine whether an individual or firm is a broker/dealer registered with FINRA (Financial Industry Regulatory Authority) by going to their web site.

 A broker cannot offer securities or solicit investments from an investor unless: 1) he or she is a registered broker with FINRA and 2) his or her securities license is at a brokerage firm that is registered with FINRA.

In addition, the securities regulations state that your registered broker cannot make cold calls to offer securities. A substantive, pre-existing relationship is required to exist prior to soliciting investors.Cold calls by the broker to prospective investors,in particular, may cause this offering to be considered a 'public offering', which would create numerous legal problems for both the broker and the company.

Perhaps Uncle Bob's friend is on the up and up.  But don't take anyone's word for it.  Check them out with FINRA.