What's a "lead investor"?
Wantrepreneurs are all talk. Actual entrepreneurs — like you, dear reader — know what the words they say mean. Blogging VC Fred Wilson makes an effort to help by defining the term "lead investor." I suspect anyone ambitious enough to benefit from his advice will be too impatient to wade through it. Forthwith, the 100-word version.
You've probably hit this delaying tactic after you've snagged a meeting with a venture capitalist. He expresses interest, but tells you he wants to wait for a "lead investor" before committing any money. This is a gentle way of saying no. "Spend all of your time looking for a lead investor," Wilson writes. "If the investor won't lead, don't take the meeting."
Here's what a lead investor will do for you that followers will not, Wilson says:
1) they'll raise their hand and say "we are in".
2) they will negotiate price and terms
3) they will hire a lawyer, negotiate documents, and get the deal closed
4) most of the time, they will take a board seat
5) they will work on the investment after the deal is closed
6) they will be your first call when you need to discuss something with your investors and they will help you manage the rest of the group (if there is one)
Sounds great, if you can find one. But good luck locating a venture capitalist who's actually willing to do some work.
