This article is the first in an ongoing series on Deal Leadership. To learn more about leading a deal efficiently, download this free eBook today: Lead, Follow Or Get Out Of the Way -The Art and Science of Deal Leadership or purchase our books at Amazon.com.
Active deal leadership is one of the essential elements of success in early stage investing. As legendary investor Fred Wilson observed, every round needs a lead investor:
“A lead investor sets the price and terms of the investment, takes a large part of the round, and usually agrees to represent the entire round on the board. Then everyone else gets to pile in behind them and piggyback on all of that work. And the entrepreneur and lead investor allow the followers to do that because either they are likely to help the company in some way or because the company needs more capital than the lead is prepared to invest at this time.”
Deal leadership is hard, and Fred Wilson doesn’t even mention the diligence aspects of deal leadership. Being a great deal lead takes experience, or the guidance of a great process.
That is the purpose of this series - to provide the guidance of a great process so that more people can step up to serve as much-needed deal leads. As you work your way through this series, and the related tools and checklists, you will benefit from the learnings of very experienced investors who have honed their process over many years, and over many hundreds of deal lead efforts culminating in investments in nearly 100 companies.
Early stage investing networks can struggle with motivating members to step up and get involved in deal leadership and due diligence. Part of the issue is fear of the unknown and being overwhelmed by a sense of not knowing where to start. We put this series of articles together, along with our Investor’s Guide to Due Diligence, in order to help people get over the hump and get involved.
Not every investor needs to be a deal lead, but every successful early stage investment has a deal lead. You cannot make money in this space without leads on deals. Do you have what it takes? Read along to find out.
Want to learn more about leading a deal efficiently? Download this free eBook today Lead, Follow Or Get Out Of the Way -The Art and Science of Deal Leadership or purchase our books at Amazon.com.