View from Seed

FEBRUARY 4, 2021

It’s a super important, near permanent relationship, especially for a lead investor that is likely to take a board seat for many years. But their reputation with founders that pitch them is mixed. There is a well-known trope that choosing a VC to partner with is like marriage. This is true.

Founder 280

Founder Lead Investor Portfolio Reputation 280

Both Sides of the Table

MARCH 6, 2011

I ask Naval about the importance of a lead investor. My opinion is that it’s very important to raise money from someone who is helpful and reputable and is willing to bring in the same types of investors. What if nobody stands up as a lead investor? Is this a potential issue with AngelList?

Valuation 292

Valuation Deal Flow Lead Investor Cofounder 292

Babbling VC

DECEMBER 5, 2010

This was absolutely catastrophic to the business as new investors were swayed by an insider (a reputable one at that) not going along with the investment. Running around Europe trying to find lead investors for these businesses was priority number 1. The company ran out of cash and was sold as part of a firesale. .

Technical Review 76

Technical Review Europe Portfolio Germany 76

Both Sides of the Table

APRIL 3, 2010

I believe these VC funds have suffered some amount of reputation fall out. Second, more damning is the “signaling problem.&# This means that if a VC invests in your seed round and does not participate in a future round the next round investor will think to himself, “well, if Big VC Co. Great reputation.

Venture Capital 265

Venture Capital Term Sheet Early Stage Silicon Valley 265

David Teten

SEPTEMBER 6, 2015

Some corporate funds now lead rounds. Others follow independent financial lead investors and most require that independent investors be part of the syndicate. Teten: What makes for a good vs. bad corporate venture investor? This sector has come a long way and matured a lot. .

Venture Capital 60

Venture Capital Balance Sheet Technical Review Portfolio 60

Hunter Walker

AUGUST 29, 2017

Homebrew’s focus is ~8 or so seed commitments per year, and we’re putting dollars, sweat and reputation behind those companies ongoing. In reflecting, perhaps this isn’t just the “one question” investors should ask founders, but one founders want to offer up.

Founder 86

Founder Incubator Seed Stage Lead Investor 86

OnlyOnce

JULY 26, 2018

Your win might not be sustainable, and you’ve put your reputation at risk. Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table.

Cap Table 61

Cap Table Lead Investor Valuation Reputation 61

OnlyOnce

JULY 26, 2018

Your win might not be sustainable, and you’ve put your reputation at risk. Or you negotiate the highest possible valuation from a new lead investor, only to discover that new lead investor, now on your Board, expects you to triple it in four years and is way out of alignment with the rest of your cap table.

Cap Table 48

Cap Table Lead Investor Valuation Reputation 48

Hunter Walker

JANUARY 10, 2022

The needs of the lead investor for ownership? A round that is most accommodating for the existing investors while allowing you to get new people involved? Next would be the fund itself: reputation, expertise (early stage vs. multi), and market experience (fintech/insurtech).

Cofounder 113

Cofounder Founder Acquisition Startup 113

Hunter Walker

APRIL 20, 2018

Like we do at the seed stage, USV almost always plays the role of “ lead investor.” ” And later: “The truth about these situations is a few seed investors will massively over deliver and the rest will massively disappoint.” But it often is not.”

Seed Stage 49

Seed Stage Lead Investor Portfolio Reputation 49

Startup Lessons Learned

JUNE 9, 2020

Eric Ries : An indelible part of your reputation and this is laying the foundation for whatever the future of this company is going to be. And the crisis has made extremely clear who was serious about that and who just thought it would be a fun thing to help improve management's power over their investors or whatever other reason they had.

Silicon Valley 60

Silicon Valley Hosting Cofounder Employee 60

Rob Go

JULY 17, 2014

2) Is your reputation in the market such that great people will want to work with you? We want to be able to comfortably lead these rounds and speak for 1/3 – 1/2 of the capital or more. Our new fund size allows us to do that and continue to play the part of the lead investor. This leads to the second factor.

Seed Stage 69

Seed Stage Early Stage Due Diligence Liquidity Event 69

Up and Running

JANUARY 25, 2017

The lead investor, the individual that seemed the most optimistic about our pitch, was surprised to hear from me so soon. I was surprised he answered the phone; most investors don’t want to take follow-up calls from people that have recently pitched them. But I was too upset to sleep. Just don’t ever give up.

Venture Capital 60

Venture Capital Cofounder Security Partner 60

David Teten

JULY 12, 2017

Steve Brotma n of Alpha observes, “In general, for any co-investor, the higher the quality of the institutional VC firm lead for the new round and the more reasonable the valuation, the better the odds of a coinvestment. Hence, if Sequoia is the lead and the valuation is reasonable, it’s near 100% chance.

Syndicate 60

Syndicate Syndication Institutional Investors LP 60

Austin Startup

JUNE 4, 2017

Lead Investor : The person or firm who defines the terms of the round. Early on I decided that finding a lead first was important and I aimed high. I found a great lead in Mark Cuban. His team was fantastic, they were fair, they helped provide us with a good foundation for other investors to participate in.

Austin 54

Austin Institutional Investors Angel Groups Deal Flow 54

Professor VC

OCTOBER 20, 2009

Im also a strong believer that your track record and reputation are your most valuable assets in the venture community. In how many of those were you a lead investor? What percentage of your members are not active angel investors (i.e. This is not something that can happen overnight by putting a press release on the wire.

Angel Investor 35

Angel Investor San Jose Due Diligence Silicon Valley 35

Rob Go

AUGUST 9, 2016

Think of it this way, an investor may invest in 1-3 deals a year, and build a portfolio of 7-12 active companies that they are point on at any given time. Entrepreneurs are typically only choosing one lead investor and board member per round. But often, it is not.

Term Sheet 28

Term Sheet Due Diligence Lead Investor Portfolio 28

Venture Chronicles

JULY 16, 2010

With the lead investor in the recently funded round pulling back their cash the company was forced to lay off nearly all of their staff. This scenario played out just yesterday with a company I am familiar with and the result has been devastating.

Due Diligence 28

Due Diligence Term Sheet Limited Partner LP 28

Reid Hoffman

JANUARY 26, 2021

This is one of the reasons why the best practice for a startup is to raise investment rounds from different lead investors rather than simply doing internal rounds, even if an internal round requires less work. One of the things a financing round brings is an opportunity to strengthen the startup’s overall network.

Startup 36

Startup Equity Early Stage Green 36