Startup Lead Investors vs Follow Investors

Benjamin Debonneville
Founder & CEO
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Starting a startup? Funds are your fuel. Every budding business needs financial backing to grow, and that's where investors come into the picture. Now, here's the catch: they're not all cut from the same cloth.

Picture this: a lead investor, acting as the captain steering the ship, and then the follow or secondary investors, the crew members ensuring smooth sailing. Piqued your interest in who does what and how they impact your business journey.

In this article, we will explore the dynamic and pivotal roles of lead and follow investors in propelling a startup toward success.

Who are the Startup Lead Investors?

So, who's this "lead investor" everyone mentions in the startup ecosystem? In essence, a lead investor is that main player who steps in first, injecting a significant sum into your startup—typically between 30% to 80% of the funding round.

But it's not just about the money. Acting as the captain of your financial ship, they play a pivotal role, guiding the fundraising process and often bringing other investors on board.

Furthermore, this person, or sometimes an organization, usually comes with vast experience in your industry. They serve as a bridge, connecting the company with other investors, and often take a seat on your company's board. Think of them as your startup's mainstay.

Beyond just funding, they offer expertise, guidance, and credibility. Their seal of approval? It's like a magnet, drawing other potential investors, and signaling that your startup is a venture worth backing.

Who are Follow Investors?

So, we've talked about the lead investor, but what about the follow or other investors? Let's break it down. Imagine you've bagged a hefty $7 million from a lead investor. Great, right? But you're aiming for $10 million.

This is where follow investors come in. They won't drop the full amount or even half, but they'll chip in, say, $1 million or so to help you reach that goal.

These investors have a simpler role. While the lead investor might be knee-deep in board meetings and major decisions, follow investors? They pretty much write the check and observe.

They often trust the lead, relying on their expertise and due diligence. Plus, there's a silver lining! These followers, after getting a feel of your business, might step up in future rounds.

They may invest more or even take the lead. Think of them as backers, believing in your venture and adding that extra financial boost.

Lead Investors vs Follow Investors: Major Differences

For early startup founders, understanding the distinct roles of the lead and follow investors is crucial. But what sets them apart?

Here, we dissect the major differences between the two:

  • Initial Investment Size
  • Lead investors typically inject a substantial portion of the needed capital, often between 30% and 80% of a funding round, becoming a foundational pillar of your financials.
  • Follow investors, on the other hand, contribute smaller sums, helping to fill the funding gap without dominating the financial structure.
  • Involvement Level
  • Leads usually immerse themselves deeply, often sitting on boards, participating in strategy formulation, and actively engaging in company operations.
  • Followers generally maintain a lower involvement, primarily providing financial input without getting entangled in operational or strategic intricacies.
  • Decision-making Authority
  • Lead investors often wield more significant decision-making power, influencing company strategy, and direction due to their hefty financial stake and involvement.
  • Follow investors typically have limited say, as their smaller investments don’t grant them substantial authority in steering company decisions.
  • Risk and Trust
  • Leads typically shoulder higher risk as they put in the most capital upfront, placing immense trust in your venture.
  • Followers, while still pivotal, often come in when a reputable lead has validated your startup, thereby mitigating their risk through trust in the lead's judgment.
  • Relationship with Other Investors
  • Lead investors usually facilitate and drive the fundraising round, managing communications and negotiations with other potential backers.
  • Follow investors, while vital, might not engage in active dialogue or negotiation, instead aligning with the terms set by the lead.
  • Strategic Involvement
  • Leads frequently delve into strategic planning, providing expertise and steering strategic formulation to ensure a return on their sizable investment.
  • Followers are less likely to plunge into strategic depths, often providing financial backing without intertwining it with strategic advice or direction.
  • Due Diligence
  • Lead investors often undertake thorough due diligence, dissecting your startup’s viability, potential, and risks before committing their funds.
  • Followers, while still conducting their analysis, may lean heavily on the lead's initial scrutiny and validation, basing their trust partially on the lead's decision to invest.
  • Future Investment Rounds
  • Lead investors, having embedded themselves substantially in your venture, might remain pivotal in subsequent funding rounds.
  • Follow investors, while they may increase their stake in the future, do not guarantee further investment and might evaluate your progress from a distance before deciding on additional funding.

Roles and Responsibilities of Lead Investors

A startup's journey is fraught with challenges and opportunities. Lead investors, with their multifaceted roles, are often the navigators guiding startups toward success and sustainability.

Their influence spans the fundraising journey, offering both capital and crucial guidance. Here are the major roles and responsibilities these invaluable stakeholders uphold:

  • Leads the Funding Round: Lead investors kick off the investment momentum, either by injecting a significant sum or being the first to pledge support. Their involvement often signals the startup's viability to other potential backers.
  • Leads Negotiations: Taking charge of discussions, they negotiate crucial aspects, from company valuation to equity distribution, ensuring favorable terms for all involved parties.
  • Validates Business Plans: Before any commitment, lead investors meticulously assess and validate the startup's business blueprint, ensuring its feasibility and growth potential.
  • Liaison Role: Acting as the primary channel between the company and the investor pool, they streamline communications, ensuring transparency and alignment on goals and progress.
  • Represents Investor Interests: Beyond their own stake, they champion the collective interests of all investors, safeguarding their investments and ensuring wise utilization by the startup.
  • Provides Guidance: Leveraging their experience, lead investors offer strategic counsel, helping startups avoid pitfalls, optimize growth strategies, and make informed decisions.
  • Secures Future Funding: Their presence can catalyze further investments, with many investors more inclined to participate when an established lead investor is at the helm.
  • Maintains Share Lock-up Agreements: They uphold and respect agreed-upon share lock-up periods, refraining from selling their stake prematurely, and ensuring stability and trust within the investment circle.
  • Joining the Board: Often, lead investors take up board positions, allowing for a more hands-on approach in steering the company's direction and decision-making.
  • Risk Mitigation: By conducting due diligence, they help in risk assessment, ensuring the startup's business model is robust and growth projections are grounded in reality.

Roles and Responsibilities of Follow Investors

Follow investors, while not in the limelight like their lead counterparts, offer a blend of financial backing and strategic support, proving instrumental in a startup's ascent to success.

Complementing lead investors, they bolster funding rounds and offer additional layers of support. Here are the primary roles and responsibilities these supportive stakeholders uphold:

  • Supplementary Investment: Follow investors step in post lead investors, chipping in additional capital, helping startups reach their funding goals, and ensuring the venture's financial health.
  • Relies on Lead's Due Diligence: Typically, they trust the groundwork and vetting performed by the lead investors, ensuring they're investing in a viable, promising startup.
  • Offer Expertise: While they might not be as hands-on as lead investors, their industry insights, knowledge, and connections can prove invaluable for the startups they back.
  • Monitors Progress: Follow investors to keep a close eye on the startup's growth trajectory, ensuring their investment is being utilized optimally and milestones are met.
  • Stakeholder Communication: They maintain open channels with both lead investors and the startup team, ensuring clarity, alignment, and promptness in information exchange.
  • Risk Diversification: By spreading their investments across multiple ventures, follow investors play a key role in risk mitigation, balancing their portfolio for potential higher returns.
  • Potential Future Leadership: Building trust and rapport over time, they have the potential to lead subsequent funding rounds, transitioning from a supportive to a pivotal role.
  • Promote the Startup's Vision: Beyond mere capital, they're often vocal supporters of the startup's vision, advocating for its success in their professional circles and beyond.
  • Facilitate Introductions: Their network can be a boon, introducing startups to potential partners, clients, or even future investors, fostering growth and opportunities.
  • Maintains Investment Terms: Ensuring adherence to the agreed-upon terms, they safeguard both their interests and the sanctity of the investment process.


Investing in startups isn't merely about injecting funds; it's about nurturing visions and turning riveting ideas into reality. While lead investors pave the way, structuring deals, and setting milestones, the following investors fortify these financial journeys, ensuring startups have ample resources to tread the rocky paths ahead.

Both play pivotal roles, balancing each other out, aligning capital with dreams, and amplifying prospects into palpable results. For early startups, understanding the distinct, yet harmoniously intertwined roles of these investors means unlocking avenues of growth, innovation, and unparalleled success.

Benjamin gave great tips to my start-up Blend for polishing and optimising my pitch deck, refreshing perspective. Recommend!