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The entrepreneur playbook for sourcing a lead investor in NYC

By VentureBeat

New York has plenty of lead investors, spanning pre-seed to growth rounds, but many entrepreneurs think they need to head west to find their leadRead full story

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  • Some nuance to add: my company, Parabol, just completed Techstars. Later this year we will raise our seed. Here's what we learned: similar to the article, focus first on building conditional commitments to join the round (they may sound like, "when you have a lead and if we can get 20% ownership percentage, we'd be in for $300k.") Oversubscribe on conditional commitments. Then, return and negotiate terms—let the desire for ownership dictate who will be the lead. The reason for this ordering is a

    Some nuance to add: my company, Parabol, just completed Techstars. Later this year we will raise our seed. Here's what we learned: similar to the article, focus first on building conditional commitments to join the round (they may sound like, "when you have a lead and if we can get 20% ownership percentage, we'd be in for $300k.") Oversubscribe on conditional commitments. Then, return and negotiate terms—let the desire for ownership dictate who will be the lead. The reason for this ordering is a recognition that early in the process the power balance is completely with investors (unless you are an entrepreneur with a track record). By collecting commitments first, you even out and possibly flip the power balance—creating conditions to perhaps even choose from among multiple term sheets from potential leads. Want to see if we can pull it off? Follow me...

  • Securing a lead investor in any round is one of the most opaque and difficult processes for founders. There’s often no good way to discern which investors lead from publicly available data (yes, even crunchbase isn’t super helpful).

    To make matters worse, that’s usually the missing link for closing a round. Over and over when I was a VC, I’d talk to founders who said they had investors lined up and ready to go...they were just waiting for a lead.

    White Star Capital has done a phenomenal job of

    Securing a lead investor in any round is one of the most opaque and difficult processes for founders. There’s often no good way to discern which investors lead from publicly available data (yes, even crunchbase isn’t super helpful).

    To make matters worse, that’s usually the missing link for closing a round. Over and over when I was a VC, I’d talk to founders who said they had investors lined up and ready to go...they were just waiting for a lead.

    White Star Capital has done a phenomenal job of becoming a resource for founders who need lead investors.

  • In this article, I try to help with the #1 issue that entrepreneurs tell me on a daily basis that they struggle with: finding a lead investor for their round of financing

  • I echo Ian's commentary. Far too many founders get stuck in the Catch 22 of trying to secure a lead investor, and far too few investors step up to the plate to truly set the terms.

    It's also great (and personally not surprising) that the author of this playbook is White Star Capital Partner Lylan Masterman, who's been a longtime solid investor and friend.

    Fun fact: You can also follow him on this app!

  • Having Angel invested in more than a couple dozen companies in my lifetime, I would argue that investors outside the lead don't necessarily have a lot of power in the negotiation. In most cases we end up being diluted or knocked out completely by aggressive lead investors and often by the management capitulating on sacrificing the original investors.

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