Is it appropriate to give away a 5% referral fee plus equity in my company? They are asking for 5% of whatever the investor gets: ie 30% would mean the referrer would get 1.5% of our company. What do you think?
Let me start by saying that my answer relates to the US. In other parts of the world the attitude might be different.
No, it's not appropriate.
On the surface it makes sense since most entrepreneurs are desperate for investment that this seems like a small price to pay for it.
It is appropriate to have an advisor that works with your company and helps you find investments. Usually these advisors will get 1% of the shares or less spread over 2 years or so.
*Never give money upfront to brokers. *