Five Characteristics of a Lead Investor

2min read Five Characteristics of a Lead Investor

I often hear of entrepreneurs stuck in their fund raise efforts with several prospective investors but no one willing to be the first.  That’s because the first investor could be the last in a deal, and no one wants to be that investor. The lead investor breaks down that barrier by providing the initial capital and due diligence that paves the way for others to join the deal.

Here are some key characteristics of a lead investor:

The Lead investor provides a substantial sum of capital, at least $100K. The $25K check writer should not be leading the deal.

The Lead investor also gives advice. He should have experience in the industry and know well the problem the company is solving.

By going first, he’s putting his reputation on the line, making him your lead advocate.  Keeping the lead informed is essential as he’s championing your deal more than other investors. He should also bring a strong reputation that attracts others to your deal.

Finally, the lead investor performs the initial due diligence. All investors should be performing their due diligence, but most will use the lead investors’ work as the basis for their decision.  This can easily reach 30 to 40 hours of work.  Signing up a lead investor can be challenging if the entrepreneur doesn’t offer compensation.

Finding a lead investor helps to start with those who know your industry and market.  Those with a successful business track record are ideal candidates. They say it takes seven touches to close a sale, so it takes seven touches to close an investor.

Read more TEN Capital Network Education Here

Hall T. Martin is the founder and CEO of the TEN Capital Network. TEN Capital has been connecting startups with investors for over ten years. You can connect with Hall about fundraising, business growth, and emerging technologies via LinkedIn or email:

, , , ,
Previous Post
How to Invest in Startups: Learn From Other Investors
Next Post
The Three Levels of Due Diligence

Related Posts

Startup Valuations

2 min read Startup valuations differ from standard valuations in that they don’t solely rely on expected cash flows, book value, or other tangible aspects of the business. Intangibles such as quality of the team, intellectual property, product status, and…

Startup Investing: What You Need to Know

2 min read Startup investing is an attractive venture for many in the world of investing. Before investing in a startup company, its important to have a well-thought-out plan. In this article, we discuss what percentage of discretionary funds investors…

The Three Levels of Due Diligence

2min read How much due diligence is enough? While there are many checklists and rules of thumb surrounding the process of due diligence, the endpoint never seems clear. Most investors dedicate a certain number of hours, 20, 30, or more,…