One of the things that sets Angels Den Funding apart from other investment platforms is the lead investor model. After a thorough screening process is performed by our experienced entrepreneur management team, the selected company is featured in the ‘Looking for a lead investor’ section of our platform. What happens next is that Angels Den Funding carefully matches the start-up with a suitable lead before opening the funding to the wider network of investors.
What is a lead investor?
A lead investor is an individual or an who will lead a funding round and may also act on behalf of the other investors. The lead is usually the first to offer their financial support for the company looking for funding, while also investing time and expertise to ensure that the round is closed successfully. At Angels Den Funding, we look for a lead investor that is going to add value and inject smart capital that will drive the business forward.
What are the lead investor’s responsibilities?
Specific responsibilities for the lead investor are usually set out in the investment agreement. We are highly selective about the businesses we put forward for investment. But, despite all the rigorous pre-screening we do and information we can provide (such as the companies' pitch documents) we advise all potential lead investors to do their own checking before .
The lead’s due diligence would typically range from a company visit and a few questions, to a full and rigorous appraisal, perhaps with outside help. We have guidance and masterclasses to help them ask all the right questions. Our investor relations team is always ready to help with any additional information.
In addition to this, lead investors provide mentorship for the company they decide to lead. Being a lead investor allows them to use their sector expertise, skills, and connections to help the business succeed and, ultimately, significantly increase the return on their financial investment.
This way, the startup benefits from valuable insights and a sustainable management strategy. A lot of early-stage companies fail despite having great ideas and dedicated founders. This happens when the team is not ready to manage the specific challenges that arise during the growth process.
What are the main advantages?
Are there any drawbacks?
Our lead investor model allows the applying start-up to also bring their own lead. In this case, we will open the funding round to our wide network of investors. Otherwise, the main drawback of Angels Den Funding’s lead investor model is that a few companies do not receive interest from a lead. Therefore, that company cannot raise with us. This does not necessarily mean that it is not a good business, but rather that our lead investors are not interested in that specific sector or it is not a convenient time for them to invest.
At Angels Den Funding, we focus on quality rather than quantity. Since 2013, 92% of our funded deals are still trading and this result speaks for itself. The vetting process plays an important role in maintaining this badge of excellence, but we would have never been here without taking into consideration our investors’ interest. If the investors are satisfied with the investment opportunities they find on our platform and they are willing to back up a deal, the chances for that business not to thrive are greatly reduced.