What to do when everyone is waiting for someone else to be your “lead investor”

First things first: what’s a lead investor?

Take it away, BusinessDictionary.com: “A lead investor is usually the initiating venture capitalist who takes charge of the deal, and who may also act on behalf of the other investors.”

David Cohen from TechStars recently posted an extremely on-point take on the “lead investor” dance, about the commonly encountered phrase, “Let me know when you have a lead investor.” This nebulous phrase is often encountered by startups in their first round of fundraising, and it serves as cover for a range of actual meanings:


“My instincts say no, but on the off chance I’m wrong, let me know who else decides to invest and if they’re really impressive, I may change my mind.”

“I think you’ve got a great idea, but let’s see if anyone else thinks so.”

“I’m truly interested in investing in your company, but I want to keep my options open until the last possible moment.”

“I’m truly not interested in investing in your company, but I want to keep my options open until the last possible moment.”

As an entrepreneur trying to fundraise, your job is to try to dig underneath the “lead investor” put-off and determine what the person is actually saying. How “in” are they really? David suggests, “Ask them what it is about a lead investor that will cause them to commit… Ask them to commit with the assumption that you’ll later have those things.  Tell them you’d never hold them to their commitment if they didn’t like the terms once they’re established later.”

Fundraising for a company is a bit like packing snow together into a snowball. Once you have those initial globs of snow packed together, it’s simpler to continue building. By bringing each potential investor as close as you are able to the final steps (soft commitment, firm commitment, and actually writing the check), you’re moving all other potential investors closer as well. Additionally, by digging under the vagueness of “Let me know when you have a lead investor,” you are showing your savvy and your ability to communicate clearly, saving both you and the potential investor time in the long run.

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