Choosing your lead investor.

on Jan 11

Formerly, a child. Currently, Storyteller @ Wefunder, dancer, and Slack emoji enthusiast. Unrelated, degree in Neuroscience from Harvard.

What is a lead investor?

Every company that raises on Wefunder needs a lead investor.

A lead investor is someone who believes in you and your company’s mission enough to invest a good chunk of change (ideally, $20K to $50K). The best lead investors have experience as a founder or executive and can offer advice when you need it.

Lead investors represent all of your Wefunder investors. This massively simplifies logistics for you since they allow for the whole raise to appear as one line on the cap table.

What does a lead do?

1. Simplifies future legal logistics.

2. Lends credibility, convincing others to invest.

3. Offers advice and guidance when they can.

How does a lead simplify legal biz?

As your company grows, your lawyers will eventually ask you to get signatures from every investor on your cap table, even if you don't explicitly need their permission.

These signatures will authorize corporate actions like expanding a stock option pool, converting a SAFE or note, initiating a follow-on financing, or getting acquired.

The lead investor is the single person who makes decisions with respect to these documents on behalf of your investors on Wefunder and then directs the custodian to take a specific action, such as directing the signing of the documents.

They work to maximize the value of your securities and, by extension, help your company succeed.

Who is qualified to be a lead?

We’ll almost always approve a lead investor that invests $20,000 or more on the same terms as other Wefunder investors – provided there is no conflict of interest or family ties. We will also always approve an XX team member. More on XX here.

If you recommend someone to be a lead investor, we'll approve after a 10 minute interview based on these criteria:

They invest at least $1K in your company on the same terms as other Wefunder investors.
They are not a family member.
They are founder-friendly (as the best investors in Silicon Valley are), but also understand their fiduciary duty to the investors.
They have a solid enough understanding of venture financing.
They are willing to provide a quote (text or video) to Wefunder investors about why they have agreed to be your lead investor.

Choose a lead who adds credibility to your campaign and generates follow-on investments.

Lastly, be sure to pick someone you trust – they’ll act on behalf of all investors that come in through Wefunder and become a core part of your fundraising team!

Get the entire scoop on lead investors here.