A lead investor is an individual or a group that leads the startup funding round by performing the diligence and setting the valuation. The lead is an investor who represents the investors in the terms negotiations with the startup.

The lead is typically the first investor funding the startup. The lead investor typically invests a substantial amount of the fundraise but not all of it.

The lead investor needs to have knowledge of the startup, the investors’ interests, and funding terms as well as deal structures. 

A lead investor has experience with funding startups and a track record in startup investing.

The lead investor will need to dedicate substantial time to the process of negotiating the terms and conditions of the deal.

A lead investor often knows other investors who are interested in joining the round.

The lead investor has access to legal resources for papering the deal.

The lead investor lends credibility to the fundraise through their reputation. The lead investor is someone other investors trust.

Startups seek lead investors who can help negotiate and set the valuation for the investment such that other investors will join the round.  

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.
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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.