At LVX, we currently have over 14000+ angel investors from 50+ countries. These angels are experts in their fields and come from a wide range of industries. But the "Lead Investor" is very important every time a startup tries to actively close their round on the platform.
We have been interacting with investors over the last few years in an effort to determine what motivates (or deters) them from becoming a Lead Investor.
Who is a lead investor?
After gathering various definitions from individuals who have experienced this situation, this is our conclusion - A Lead Investor is an individual who takes the initiative and leads the charge in a fundraising round. It would be beneficial for them to have interacted with the startup for a period to grasp the business and determine how they can assist the entrepreneur. An effective lead comprehends the subtleties of angel investing, can provide strategic value to the business, and, crucially, is prepared to dedicate the time necessary to collaborate with the startup. It is fair to say that Lead Investors have a strong affection for the founders they collaborate with and hold a deep belief in their vision and endeavours. They guide and inspire with fervour!
What is the role of a Lead Investor?
The lead investor is actively involved in two distinct phases.
Phase 1: The Fundraising Phase
Investors are prepared to invest time in assessing the startup's business plan. When a round is anchored by a Lead Investor, the other participating investors rely on the lead's thorough due diligence.
Establish the valuation and conditions of the investment for this round.
Make yourself available and accessible to fellow investors participating in the round. Investors frequently seek to engage with the lead investor to gain insights into the business's potential for investment. An endorsement from a lead significantly boosts investor confidence.
* At LVX, we utilise standardised term sheets and specific provisions in our legal documentation (including term sheets and shareholding agreements) that empower a Lead Investor to represent the Syndicate more efficiently, particularly for the upcoming round of fundraising.
Phase 2: Following the fundraising and during the company's growth years.
A Lead Investor usually embodies the collective interests of all angel investors by securing a position on the company's board.
Takes an active part in the continuous governance and reporting of the company
Offers assistance with upcoming financing rounds and strategic decision-making.
It is important to understand that a Lead Investor is not always the individual who contributes the largest amount of capital. The Lead Investor serves merely as a role definition; it can encompass a team of individuals (usually, investors take the lead in pairs, resulting in a lead and a co-lead investor). Phase 1 and Phase 2 may be overseen by two distinct individuals.
How can one join LVX as a Lead Investor?
- Effortlessly create a Syndicate using both online and offline tools to seamlessly unite its members.
- Effortless and top-notch legal documentation through Commitment-to- Closure (Financial and Legal Due Diligence, Standardized Term Sheet and Share Holding Agreements)
- Management of the program for finalising a deal within the Syndicate
- Incentives for lead investors
#LeadwithLVX
Every change brings resistance and is followed by learning. #LeadWithLVX is an initiative aimed at dismantling the barriers linked to leading startup rounds by offering lead angels the support and insight needed to successfully assume that role. Leading a round has become significantly easier on LVX thanks to our Lead Syndicate model and the provision of legal counsel. It is now the moment for industry experts and angel investors to step forward and embrace this vital role in assisting Indian founders in creating exceptional companies.
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