The actual purpose of a lead investor is somewhat debated. A basic understanding of their role is that they are the first corporates to invest a hefty sum in a startup’s vision, plan, product, and/or service. It’s risky business. Although lead investors may not be the largest investors a startup encounters in its lifetime, they play a crucial social, and obviously, economic role for a startup’s launch into a market. Lead investors are social proof that an entrepreneur’s idea is worthy of becoming a reality. In the words of Alexander Cremades, securing a lead investor gives a startup and their funding request, legitimacy, social proof, lower perceived risk for others, and creates confidence in their venture.
