Last Updated: December 10, 2021

Lead Investor for Your Business

Are you struggling to find a lead investor for your business?

Finding the right investor is more than just identifying those that invest in your industry and life cycle stage. Investors, and in particular lead investors, are commonly going to take an active advisory role in your company. For this reason, alignment with your lead investor on values, belief systems, and overall goals is essential.

What Defines a Lead Investor?

The definition of a lead investor varies on who you ask:

1. Someone that helps work with the entrepreneur to organize the other investors and any soft commitments.

2. The first person who invests in a particular round. However, this does not necessarily mean that your first investor will provide the greatest amount of capital.

3. Someone who provides the highest amount of capital in a syndicated round.

Why is Choosing the Right Lead Investor so Important?

Beyond providing essential operational capital, lead investors have other effects on a company. To start, securing a lead investor will provide a level of comfort to other potential investors.

Similarly, every investor or investment fund combs through their deal flow, looking for the right opportunity. Having a noteworthy first or lead investor can shorten a financing round, for it conveys a sign of trust.

Securing a lead investor is critical in that trust-building process. They signal that there is a future promise of an ROI and solidify the team and business model are strong. Partnering with a lead investor who places a sizable initial investment signals confidence, and like a gravitational magnet, pulls in other investors more easily.

Finally, investors travel in circles. Landing your lead investor gets you access to their network of influence, again improving the likelihood of closing your round more quickly.

Where are the Lead Investors?

For starters, entrepreneurs can purchase subscriptions to sites like CrunchBase and Pitchbook. These sites provide endless amounts of data, from who has raised capital, when, and how much. They also show the investors that are backing each company.

Finding investors can be done without purchasing expensive tools. Sitting down and doing research on Google or inside LinkedIn can reveal investor networks in your area. Most large cities or entrepreneurial communities have investment funds, accelerators, and groups that are always searching to build upon their deal flow.

If you’re not finding a lead investor you can also apply to pitch competitions. This will further expose you to high net wort individuals looking to invest.

The Importance of a Good CRM

The best way to find a lead investor is through prioritization of your leads and management of those relationships through a CRM, or Customer Relationship Management platform.

The main benefit of utilizing this tool is to organize and assist with communication and to respond to any requests promptly, such as providing information or updating pitch materials to potential investors.

Key metrics to prioritize investors by include:

· Their track record as a lead investor

· Their ability to syndicate

· Knowledge and experience in your space/business stage

· The amount of capital they have to deploy

This certainly isn’t an exhaustive list, and there will be other factors to consider. Raising money is a brutal process, and the road is riddled with many who will say no. Just keep building and remember that timing is everything, and eventually, your day will come.