Breaking down the definition of a Lead Investor, their role in a funding round and how to become one.
At LetsVenture, we have more than 3,500 angel investors from 23 countries. These angels come from various sectors and are experts in their domains. However, every time a startup looks to actively close their round on the platform, the role of a "Lead Investor" becomes critical.
Over the past few months, we have been engaging with these experts trying to figure out what encourages (or discourages) them from becoming a Lead Investor. Let us explore who they are and what their role is.
After receiving multiple definitions from those who have been in this position, this is what we stick to - A Lead Investor is an investor who willingly steps in and represents the investors of a startup before, during and after a fundraise. They should ideally have engaged with the startup for some time to understand the business and see how they can support the entrepreneur.
A lead understands the nuances of angel investing, can bring in strategic value to the business – and most importantly - is willing to commit the time to work with the startup. It wouldn't be much of an exaggeration to say that Lead Investors love the founders they work with and believe in what they are trying to build. They lead and lead with passion!
On LetsVenture, this is how we define one:
A Lead Investor could be an individual or a group of two to three investors (who could co-lead the round).
They are someone who will
A Lead Investor plays an active role in two phases.
Phase 1: The Fundraise Phase:
*On LetsVenture, we have standardised term sheets and special provisions in the legal documentation (term sheets and shareholding agreements) that enables lead investors to represent the syndicate more effectively especially for the next round of fundraising.
Phase 2: After Fundraise, in the growth years of the company
A Lead Investor is not necessarily the person who puts in the maximum capital. The Lead Investor is only a role definition – this could be a team of people (typically investors lead in pairs so there could be a lead and a co-lead investor) Phase 1 and Phase 2 could be managed separately by two different people.
How to become a Lead Investor on LetsVenture?
At LetsVenture, we are putting together a framework to help Lead Investors.
If you’re interested to start your journey to become a Lead Investor, tell us here!
In this series, LetsVenture will attempt to break the barriers associated with startup funding by providing a deeper understanding of the ecosystem and helping people #LeadWithLV.