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.

Trending Sources

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.”

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.

What percentage of a Series A round is typically invested by the lead investor?

Gust

In unusual (but not unique) cases, a well-respected or high-profile individual angel may be able to successfully lead the first professional funding round of an early-stage startup with a very small investment, accounting for only a small percentage of the round. Invested Interests Angels funding investor series a

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.

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

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

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. .

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.

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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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.

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. .

Second and Third Tier Markets And Beyond

A VC : Venture Capital and Technology

Last night we attended a cocktail party with investors from the southeast and then had dinner with an entrepreneur in Atlanta that The Gotham Gal backed a few years ago. You could simply focus on Silicon Valley and ignore every other part of the US and the world and do just fine as an investor. You could simply focus on NYC, LA, and Boston and ignore the bay area and other parts of the US and the world and do just fine as an investor.

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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Sticking With The Struggling Investments

A VC : Venture Capital and Technology

The truth is the investments that are working often don't need that much from an investor. And I think the lead investor board member has an obligation to provide that help. But it is an important theme for me and for entrpreneurs and investors. That's what fans do and what investors should do too. My friend Bijan tweeted this last week: One of the hardest things to watch is a company having an identity crisis. Bijan Sabet (@bijan) November 27, 2013.

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.

What Are Pre-Seed Rounds and Why Do They Exist?

View from Seed

After all, aren’t seed investors (like us) by definition supposed to be the first and earliest-stage investors? Series A investors invested quite early, often before product/market fit. The proliferation of seed-stage investors.

When Should Startup Founders Discuss Valuation with Seed VCs?

View from Seed

Sharing these pricing expectations early with potential lead investors fundamentally qualifies your conversations, but it also runs the risk of prematurely losing a potential financing partner, or else it can reduce options to maximize your fundraise outcome.

The Market Size Fallacy for Seed-Stage Startups

View from Seed

This investor loved the team and thought the solution they were building was compelling. I remember talking to one of their angel investors (and also one of my old mentors) about what the company could become and what it would look like if it ever became a really big business.

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.

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.

Quick Post on Post-Money Valuations

Rob Go

The main reason for this, I think, is that there has been such a proliferation of convertible notes, SAFE’s, and other instruments that it becomes tough for a new investor to feel confident that they fully understand a company’s cap table prior to an investment.

Invest In The Mess

A VC : Venture Capital and Technology

Investors are throwing money at energetic entrpreneurs with plans, hopes, and dreams and at emerging winners like Groupon, Gilt, Twitter, Facebook, etc. We are doing many of these rounds as inside rounds, meaning the existing investors are funding the company without a new lead investor. What I don't see is a lot of firms interested in leading these messy middle stage rounds as a new lead investor.

Angel Bootcamp, The Blog Post: A Primer on Angel Investing

View from Seed

And although this is written for angel investors, I think entrepreneurs can only benefit by increasing their knowledge around these investors and hope you’ll continue reading if that’s you. Favor investment rounds with strong leads that haven’t raised millions of dollars before you.

Doing References on Potential Investors

Rob Go

Raising money is often challenging, and a lot has been written about how to optimize the process to get the most attractive deal with the right investors. But relatively little has been written about actually selecting the “right” investor.

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.

Lightspeed is growing our Consumer Investing team

Lightspeed Venture Partners

His full time job is CEO of Cheddar , the OTT video company he founded, and where Lightspeed is the lead investor. I joined Lightspeed ten years ago. It’s been an amazing ride.

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Unintended Consequences: When SAFE and Convertible Notes Go Awry

Pascal's View

To restate two core points of the article: While there are proper uses of notes (to bridge the company to achieve a major milestone, or driven by insiders’ willingness to extend runway), there also are troubling and frequent improper uses (to postpone pricing equity until valuation is higher or to ignore the implicit message associated with being unable to find a lead investor to price the round on terms that the founders like).

CopperEgg Announces $2.1Million in Funding, New CEO

Austin Startup

Silverton Partners was the lead investor and is joined by a group of new venture and corporate investors including Webb Investment Network, the investment fund of former eBay COO Maynard Webb, and several private investors including Asana executive Kenny Van Zant; bringing total financing to $4.1M. CopperEgg, a cloud monitoring and analytics company, today announced the addition of tech industry veteran Bob Quillin as CEO, as well as an additional $2.1M

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.

FinTech Accelerating Digital Transformation of Banking in Africa

The Startup Magazine

The opening keynote session will define directions on Aligning the Role of Government Policymakers, Incumbent Banks, FinTech Innovators, Investors, Multilateral Agencies, MNOs and the Private Sector to Create a Dynamic Ecosystem for FinTech in Africa.

So What is The Right Level of Burn Rate for a Startup These Days?

Both Sides of the Table

I know it sounds obvious but just so you understand: There are more capital sources available for earlier-stage capital, the information on which they are evaluating the investment is less (it is almost certainly just team and product) and the risk of the investor getting things wrong is diminished. Who are Your Existing Investors? I’m surprised how few entrepreneurs have this open conversation with their investors. Are Your Existing Investors Over Their Skis?

How would you break down the process of raising an angel round of investment in 5-10 steps?

Gust

Understand what investors are looking for , what they usually invest in, and why. This is the case for two reasons: first, because the bare fact is that investors simply do not fund ideas. The second reason is that investors want to know that YOU believe in your own startup…and the best way for you to demonstrate that is to show that you have personally put your own money where your mouth is. Your goal in all this is to try to find a lead investor.

What is it Like to Negotiate a VC Round?

Both Sides of the Table

Pre-money ($8m) + investment ($2m) = Post-money ($10m) and the investors now own 20% of your company $2m / $10m. Another problem that arises in financings these days is that after a VC submits a $2 million term sheet all of a sudden a large number of “helpful investors” pop up who were waiting for a “strong lead” and now all of a sudden a $2 million round becomes a $2.75m round. So you can see why this leads to a lot of tension and misunderstanding.

Seed Round Dynamics

Rob Go

The idea is to get a small but solid commitment from these people, so that when you have your first conversation with a lead, it doesn’t feel like you are starting from scratch, and there is built in credibility. There are ways to do this without a lead, but I’ll ignore that for now.

How Many Angels is the Right Amount for a Startup to Have?

Both Sides of the Table

They now have a strong VC lead from Foundry Group and from experience when you get advice from Foundry it comes with authority, experience, empathy and the right amount of straight talk. I actually think a strong lead with some well-placed and experienced angels is the right mix. million from more than 30 investors. We tell them very explicitly, they should prefer a small number of investors,”. Having too many investors can lead to information leaks.

What’s a Seed Fund to Do When a Seed Round is $20 Million?

Hunter Walker

That is, raising $5m+ at a $20m+ post-money, lead by a large multistage VC. This traditionally means entering at the seed round stage (an initial financing of < $3m, lead or co-lead by us), but we’ve got access to these Straight to A rounds as well via pre-existing relationships with their founders or the lead VCs. There’s a funding phenomena I’m wrestling with these days – the Straight to A.

Constructing Your Seed Round Syndicate

Rob Go

One area of fundraising that is not that straightforward is how to put together a syndicate of investors for your seed round. Although there have been an increase in the number of seed stage investors, seed rounds are still typically composed of at least a handful of different investors, who each have their own processes and incentives. Understand the difference between and a lead and a follower. Phase 2: Close your lead.

After Raising $6.7M For Startups And Winning SEC Approval, AngelList Opens Up Investment Platform To More Companies

techcrunch.com

From 2004 to 2007, she helped lead Congresswoman Carloyn Maloney’s community outreach and relations efforts in New York City. And today, AngelList is opening the platform up to all startups with top-tier investors. Investors included Founders Fund, 500 Startups and Marc Cuban.

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