Finding a lead investor, and why the first £50k is the hardest
What a lead does, why every round needs one, where to find them, how to ask, and what to do when nobody will go first.
Every round has a moment when nobody has committed and everybody is waiting to see who does. The investor who breaks that is the lead: they set the terms, they are the reference everyone else calls, and their name on the listing is worth more than any sentence in it. Find the lead and the round follows. Fail to, and forty interested investors can stay interested for ever.
What a lead actually does
- Commits first, and usually largest — a quarter to a half of the round.
- Negotiates the term sheet; everyone else invests on those terms.
- Does the heavy diligence; smaller investors rely on it.
- Often takes a board seat or observer role.
- Is the person other investors ring to ask "are you in, and why?"
In return the lead gets influence, sometimes a slightly better allocation, and the satisfaction of having called it. There is no formal discount — and you should not offer one — but the lead does get to shape the deal.
Where leads come from
In rough order of likelihood for a £100k–£2m UK round: an angel who knows your sector and has led before; an existing investor from a previous round; a small fund or angel syndicate; a family office that has been watching; a customer or supplier who wants to back you. On Find, the lead is usually the investor whose note on expressing interest was specific, who asked for the data room within a day, and whose questions were about the business rather than the terms. Watch for that person and prioritise them.
How to ask
Directly. "I'd like you to lead this round. That means committing £150k of the £500k, agreeing terms with me, and being the reference for the others. In return you'd have the board seat and first say on terms. Would you consider it?" Most investors have never been asked plainly and are flattered. Some will say they do not lead — fine, ask who they would follow. Some will say yes on the spot.
When nobody will go first
It happens, especially with all-angel rounds. Options, in order:
- Make the first close small and soon. "First close of £150k on the 30th" gives a date and a reason. Three investors at £50k who all commit conditionally on the others becomes a lead in aggregate.
- Use an ASA. Money in now from the keen ones, shares at the round price later. Removes the "but what are the terms" objection because the terms are the round's.
- Get a term sheet from yourself. Draft fair, market terms with your solicitor and present them: "these are the terms; the first investor to commit at them gets the board seat." It removes the excuse.
- Find the objection. Ask the three most engaged investors, separately, what is stopping them. It is usually the same thing, and it is usually fixable — a valuation that needs explaining, a co-founder question, a number that looks wrong.
What a lead is not
A lead is not a guarantee. Leads fall through — diligence, cold feet, a better deal. Keep the other conversations warm until the money is in the bank. And a lead is not a boss: the board seat and the consent list are the limits of their control, and both are negotiated at the term sheet.
Questions founders ask
"An investor will lead, but wants a 30% discount to the valuation for doing so."
A modest recognition of going first — a slightly larger allocation, the board seat — is normal. A different price for the lead than the followers is not, and it will be found in diligence by the followers. Decline politely.
"Can Founder Capital lead a round on Find?"
Founder Capital's own vehicles appear on Find as listings; it does not act as a lead on founder raises. Leads come from the certified investors on the platform.
"Two investors both want to lead."
A good problem. Let them co-lead at the same terms, or pick the one whose experience you want on the board. Never run an auction on valuation between them — it sours both.