What is a lead investor?
A lead investor is an individual or an organisation who will lead a funding round and may also act on behalf of the other investors. Arguably the most important task a lead investor has, is to perform due diligence on the startup.
What is a lead investor’s role in the funding round?
Being a lead investor is not purely about capital. A lead investor must also be willing to invest time and offer the start-up insights gained from personal experience. The investor takes the lead of the funding round, playing an important role in guiding the team and utilising his/her connections in that particular business sector.
The lead investor commonly presents the opportunity to their personal network, often triggering further interest. Working closely with the team to ensure that all essential questions are answered, the lead investor will conduct due diligence in order to reduce risk for all of the investors.
Having a lead investor on board gives fellow investors a sense of security, which in turn encourages investors to participate in the funding round.
How do you become a lead investor?
Firstly, you need to consider whether you meet the criteria:
- Ready to commit over £50,000 into the start-up
- Have the time and skills to add value to the companies they’re funding
- Passionate about the start-up and confident in the founder’s abilities
- Happy and willing to carry full DD check to satisfy your own and fellow investors' requirements.
If you ever desire to improve your skills as an investor, we have developed an unrivalled series of free masterclasses. The topics we cover include due diligence, tax relief, analysing valuations and understanding the legal framework.
Angels Den has over 10 years of experience in equity investment. We’ve proven that having an active lead investor on board increases the chance of success, as a result, over 90% of our funded deals are still trading.