How To Secure A Lead Investor

Gust

By searching for a lead investor in your next funding round. The lead investor is the first step in Read more >. The post How To Secure A Lead Investor appeared first on The Gust Blog. By Paula Taas, Founder Institute.

The “lead investor” dance

David Cohen

The term “lead investor” is often code. ” Let me know when you have a lead investor. ” You see, many angel and seed investors view it as their job to establish a “free option” on investing in your company. By telling you that they’re potentially “in” if you have a lead investor, they establish the free option to decide later.

The “Come-from-Behind” Lead Investor

Genuine VC

Is it worth paying attention to this potential “come-from-behind” VC investor? The risk with engaging with an investor who isn’t as up to speed is a waste of the most valuable limited resource – time – when a CEO is concentrating on figuring out the best fit among the remaining candidates AND while simultaneously running a company, after all. The best litmus test to suss out whether or not a potential come-from-behind investor is worth paying attention to is if they’re “doing work.”

Do you need a lead investor in your seed round?

Hippoland

One question that seed investors love to ask is if you have a lead investor in your seed round. But once you figure out why an investor is asking, tactically speaking, what do you do? Do you try to find a lead? or “We want to co-lead if you find another co-lead!”

What Exactly Is A Lead Investor?

A VC : Venture Capital and Technology

The term "lead investor" is often misunderstood. I have seen VCs negotiate to be called a co-lead or a lead in the term sheet. Glenn Kelman (a long time AVC regular) has a great blog post on this featuring former Sequoia partner, now Khosla partner, Pierre Lamond in the lead investor role: Then Pierre Lamond, the Sequoia partner on the deal, began working out of our office, acting as the virtual CEO.

All I need is a lead

Taffy Williams

One such statement is a bit misleading: “ I will invest in your company once you identify a lead! One of these is, “ Do you lead or only follow?” Your visits to the funds must include a mix of those willing to do the heavy lifting and lead transactions.

Leading vs Following

A VC : Venture Capital and Technology

What Hunter is getting at is the difference between leading and following. A lead investor sets the price and terms of the investment, takes a large part of the round, and usually agrees to represent the entire round on the board. And the entrepreneur and lead investor allow the followers to do that because either they are likely to help the company in some way or because the company needs more capital than the lead is prepared to invest at this time.

Location, Location, Location

A VC : Venture Capital and Technology

Here are some “truisms” about startup investors and location that I’ve experienced and passed on over the years: Startup investors prefer to invest locally. Your lead investor/board member is more likely to be a local investor than your passive/follower investors.

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What’s actually required to start or close a funding round?

Gust

Technically, a “funding round” simply means a company accepting one or more investments from one or more investors on similar terms within a certain period of time. 25 individual angel investors funding a startup on a convertible note. In all cases, the one fundamental requirement is that the company and the investor agree on how much is being invested, and on what terms. A network of other investors to whom they can introduce the company.

ATX Seed Ventures Invests in GoCo’s $2.5 Million Round

SiliconHills

ATX Seed Ventures announced it is the lead investor in GoCo’s $2.5 Other investors included Guardian Life Insurance and Salesforce Ventures. million financing round. GoCo.io, based in Houston, is a software startup that provides an all-in-one Human Resources platform focusing on small to medium sized companies. Its founders, Nir Leibovich, Jason Wang and Michael Gugel […] The post ATX Seed Ventures Invests in GoCo’s $2.5

The "Vig" Working Its Way into VC Financings

Allen's Blog

This post in Techcrunch raises interesting issues around what seems to be a trend in VC financings for "lead" investors to get a better deal than "follower investors" in the same round. The article asserts that this is typically effected by issuing the "lead" investor shares from the equity incentive pool (called the "ESOP" in the article). They got exactly the same deal as the passive "follower" investors, who did none (or a lot less) of the work. .

Edgecase Gets $7.5 Million in Venture Capital

SiliconHills

The Austin-based startup received the funds from lead investor Austin Ventures and other investors. Edgecase, which provides data and analytics for e-commerce sites, announced this week it has received $7.5 million in venture capital. The company plans to use the money for research and development and sales and marketing. To date, the company, founded in […] The post Edgecase Gets $7.5 Million in Venture Capital appeared first on SiliconHills. Austin

TabbedOut Raises Additional $2 Million in Venture Capital

SiliconHills

The other investors include lead investor Wellington Management Company and participating investors NEA and Morgan Creek Capital […] The post TabbedOut Raises Additional $2 Million in Venture Capital appeared first on SiliconHills. TabbedOut, a mobile payments app for bars and restaurants, announced Friday it has raised $2 million more in its Series C venture round. Miami-based Aeterna Capital provided the funds.

What Valuation Should I Expect in My Seed Round?

This is going to be BIG.

That being said, you want to feel like you got a good deal--and your lead investor should be able to walk you through how they got to a particular valuation and why they thought it was appropriate. Powered by OpenReel I have to be honest, I'm a little suspect when one of the first questions a founder asks me is about valuation.

And When My Time Is Up, Have I Done Enough: Fred Wilson’s Post on ‘Time & Money’

Hunter Walker

Like many in the venture community, especially us newer investors, I enjoy Fred Wilson’s “process” posts, where he shares a POV on the practice of our profession. Like we do at the seed stage, USV almost always plays the role of “ lead investor.”

Dear elizy: an investor wants to invest when we have a lead.  what does that mean?

Hippoland

An investor I met with got really excited about joining my round. He said he would like to join once we have a lead. Do I need a lead? What is a lead? 1) Technically speaking, you do not need a lead. Dear elizy : I’m raising my seed round right now.

The Importance of Boards

ithacaVC

The importance of the Board is why institutional investors (like VCs) often get a seat on the Board after an investment. But don’t be fooled, there is an element of control as investors want a say in critical decisions. I have now done 2 deals where there has been a lead investor (not CVF) who did not mind the “founder as sole board member” trap. We followed in line with the lead investor and went along with the structure.

Keiretsu Forum Invests $3 Million in Savara Pharmaceuticals

SiliconHills

The Keiretsu Forum’s members gave $3 million as the lead investor on a Series B round for Savara Pharmaceuticals. “The opportunity to invest in Savara Pharmaceuticals attracted many of our accredited investors, who are deeply committed to supporting products and technologies with the [.]. Savara is developing pulmonary drugs to treat serious and life threatening conditions.

When Greed Turns To Fear

Feld Thoughts

If you are a founder running a high growth, VC backed company, here are a few questions to ask your investors today. If we can’t find a new lead investor, will you write us a check? There is a cliche in the financial world that has been around forever.

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Board Seat For Sale

Feld Thoughts

Whenever a new investor showed up, they wanted – and got – a board seat.” Instead, there is no formal board, or no formalism around the board, so it’s just a free for all between the collection of early investors (angels and pre-seed/seed VCs) and the founders. Post seed boards tend to be founder and investor-centric. I get that many investors want board seats as part of their investment. I had lunch recently with a founder.

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The Future Fifty: A dissection of the United Kingdom’s tech scene

The Next Web

Whilst exact details remain unclear, Tech City declared that companies on the program have access to a team of leading investors, accounting firms and business leaders for ongoing advice and support. .

Follow the leader?

Redeye VC

I just read my friend, Roger Ehrenberg’s, latest blog post on syndicating seed rounds – and totally agree with his main conclusion (that rounds tend to work best if there is a lead investor to represent the interests of the syndicate).

Angel Term Sheet Evolution

Angel Blog

This video is from a Bellingham Angel Group Education Breakfast on Angel investor term sheets. Dan Rosen, Chair of the Alliance of Angels in Seattle, and I talk about how term sheets for angel investors have evolved over the past few years.

Filling Out the Round

ithacaVC

For example, “VC will serve as the lead investor up to $400,000; Company would source balance of the round up to $600,000 (so round size would be up to $1,000,000 in the aggregate).”. At the early stage, the founding team often has lots of “interest” lined up waiting for a lead. And it also puts the founding team to the task – VC stepped up to lead so now go and fill out the round!

The Buzz on Angel and Seed Investing Continues

Feld Thoughts

But I think the two best posts to come out of yesterday are Lead Investors, Dipshit Companies, and Funding Every Entrepreneur by Fred Wilson and MoneyBall for Startups by Dave McClure. Ah – well – another day passed and there was once again a ton of chatter around angel investing. A lot of it was prompted by AngelConf 2010 which you can watch recordings of on Justin.tv ( AngelConf 2010 Part 1 and AngelConf 2010 Part 2 ).

Top Venture Capital Deals of 2012

Inc Startups

Indeed, a lack of major acquisitions and the high-profile slumps of Facebook’s and Groupon’s public offerings put a damper on investors’ appetite for venture-funded deals, says Tracy Lefteroff, global managing partner of PricewaterhouseCoopers venture capital practice.

Is An Inside Round Good or Bad?

Ask The VC

The new round is financed by the current investors. It meant the company was unable to raise money with a new outside lead investor due poor operating performance, team, market, whatever. Bijan Sabet has today’s Great VC Post titled The Inside Round. In it, he talks about the pros and cons of an inside round which he defines as: “There are times where a follow on financing does not include a new VC firm. This is known as an “inside round”.”

Too Many Investors in the Kitchen

Mark Birch

I saw a deal this week with a startup that had over 150 individual investors. When you have so many investors, it introduces too much complexity in the ownership structure and decision making process. Better to find a lead investor willing to take a major (30%+) stake of your round.

The Right Way To Get Funding From Family And Friends

Startup Professionals Musings

Yet they tend to ignore this problem, and move on quickly to professional investors. They don’t realize that most Angel investors and venture capitalists will also decline to be first, if you have no commitment from friends and family.

A primer on convertible notes, convertible securities, and equity

Hippoland

If this is your first time raising money, the mechanics of how investors buy into your company can be very confusing. Equity Traditionally, investors have invested in companies to receive equity, or shares in a company. Usually, an equity round is kicked off by a “lead investor”.

How I Think About Seed Investing As A VC

Feld Thoughts

Last week saw an explosion of discussion around seed investing, including plenty of negative comments around VCs as seed investors. While I agree that many VCs are crummy seed investors, I think there are some that are excellent seed investors. This prompted me to write a post titled AngelList Boulder and Some Thoughts on Seed Investing where I promised to write up some of my thoughts on how and why VCs could be good seed investors.

Our Model

A VC : Venture Capital and Technology

We were the lead investor in the Seed or Series A round in seven of these eight high impact companies and three of them came from seed investments. We will see how our model needs to evolve over time to make sure we can continue to deliver the results we want to deliver to the entrepreneurs and companies we back and the to the investors whose capital we manage. This past week our portfolio company MongoDB went public.

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The Gust-DEMO Fall 2012 Scholarship

Gust

The Gust-DEMO scholarship gives you and your company the chance to launch in front of a world-renown audience of leading investors, top enterprise and consumer technology press, and big company strategists. As part of your application, you will create your startup profile on Gust, which you can return to in the future to manage all of your investor relations needs.

The Truth About Small Seed Rounds

Possible Insight

Too Much Money, Obsession with a “Lead” The most common mistakes in raising a seed round are: a headline amount that’s too large and getting anchored on the concept of a “leadinvestor. Sure, there’s some chance you could find investors who simply fall in love with you and your idea (most likely if you’re in the SF Bay Area or NYC), but the probability is low and the expected search effort is high.

Putting Together Your Perfect Seed Round

Early Stage Adventures

Many companies are getting started and lots of investors are making seed investments. Spend time with your lead(s) investor agreeing on this up front. Have a lead investor. This is the person you directly negotiate with and who the other investors – VCs, micro cap funds, angels, angel groups – look to as the lead investor. Start to spend time with potential investors early.

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Failure and Redemption

Steve Blank

In my mind, I had done everything the investors asked me to do. When my co-founders and I got the company scalable and repeatable, we hired an operating executive as the CEO and returned a billion dollars to each of our two lead investors.

Failure and Redemption

Steve Blank

In my mind, I had done everything the investors asked me to do. When my co-founders and I got the company scalable and repeatable, we hired an operating executive as the CEO and returned a billion dollars to each of our two lead investors.

10 Steps to Success With Angel Investors

Business Plan Blog

10 Steps to Success With Angel Investors. Nominate one lead angel to lead the group. The individual is likely to be the lead investor in the venture and may join the Board of Directors.

Knowledge Is Power: Convertible Note Financing Terms, Part V

Gust

Investor Questionnaire. This is the norm for West Coast deals, but it’s often the case in dealing with East Coast investors (more commonly for VC financing rounds rather than angel seed rounds) that the lead investor wants its lawyers to draft the documents. On the investor side, representations and warranties in the purchase agreement primarily relate to securities law compliance.

Hacking Angel List | VentureArchetypes Blog: Seed Stage Capital

Seed Stage Capital

Since launching just over a year ago, 2,250 investors have joined, over 400 startups have raised money, and according to co-founder Naval Ravikant, about 20 new inbound companies per day sign up. Land a lead investor before going live. Investors drag their feet.