Raising money is one of the toughest aspects of running a business. If you follow the conventional approach, you’ll probably start by seeking out a lead investor to lead your investment round and to attract more investors on board.

How to Raise Money with No Lead Investor?

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But what if your business can’t seem to find a lead, are there any alternatives? This guide will look at the benefits of having a lead, but also why it isn’t necessary to have a lead investor. You’ll learn about the different routes you can take to find investment and understanding the right moment for starting fundraising.


A lead investor is defined as someone who is a:

“Partner or investor with the largest share of capital in a syndicated financing arrangement. A lead investor is usually the initiating venture capitalist who takes charge of the deal, and who may also act on behalf of the other investors.”

A lead investor would often be the first investor that decides to put money into your business. The investor would act as a catalyst to encourage other investors to follow.

A lead investor can be a single investor or you could find an investor entity taking the lead on your fundraising round. In addition, lead investors typically provide a larger share of capital to the business compared to investors who follow later on. This doesn’t necessarily have to be so, but in most instances, lead investors are also the majority providers of funding on the given round.

While a lead investor is often considered a big part of a successful fundraising round, they aren’t generally ease to find. Because a lead investor is essentially the one taking the biggest risks, as well as providing more than just their capital to your business, many investors tend to prefer to follow rather than lead an investment round.

The benefits of having a lead

Most business analysts believe a lead investor is a crucial part of fundraising success. Not only does the lead investor act as a sort of proof to other investors that it is worth investing in your business, but also lead investors play a big part in helping you understand how business fundraising works.

As mentioned above, securing a lead investor can act as a catalyst for other investors. There are plenty of investors out there willing to take smaller risks and having a lead investor, who is likely providing a big chunk of the needed funding, can help attract interest from investors who might not otherwise like to invest.

A lead investor can also help find more fundraising simply by providing you with more investor contacts and information on how to attract the right investor. You could potentially open up quite a few doors with a lead investor.

Most lead investors also play a more crucial part in the business than just supplying money – they become the mentors and the advisors to help take the business to a next new level. Lead investors, at least the good ones, tend to invest quite a bit of time to your business as well. If you are a start-up, this extra expertise from someone who’s been in the business for a long time can be more valuable than cold, hard cash.


Reading about the many benefits of having a lead investor can seem a bit daunting. You might be thinking, “If the advantages are so fruitful, what is the point of trying to raise money without a lead?”

Although having a lead can make your fundraising a bit easier, finding a lead in the current investment climate is anything but a breeze. In fact, attracting a lead to take charge of your fundraising can be so difficult you want to keep other options over as well.

Finding a lead investor can take quite a bit of time – a luxury you might not have as a start-up. Furthermore, investors might want a lot more as a lead than as a ‘follower’. While they might be providing you with a big chunk of capital and further expertise, the term sheet might not be advantageous to you. Therefore, finding a lead might not be as beneficial to your business as you think.

Advocates of finding a lead investor can sometimes make it sound like there is no alternative. But a lead investor is not a legal requirement for fundraising – you can find investors and attract fundraising, even if you don’t find a lead.

In fact, the investment world is moving towards a more flexible approach to investing. The days of fixed rounds, fixed investments and fixed term sheets are over – investing and fundraising are becoming flexible and you, as the business owner, are in charge of the process.

Paul Graham, the co-founder of Y Combinator and a visionary, technical start-up founder, told in an interview that, “The way of the future is no fixed amount, no fixed closing date, and no lead”.

Below sections will look at some of your options for raising money without a lead. You can get tips on how to approach fundraising through this new approach and give your business a good start even if you can’t find a single lead investor.


Syndicated investment refers to investing in projects, such as start-ups, which are considered too risky for a single investor or investment firms. Syndicated investments are joint investment opportunities and a good option for business fundraising.

While a mass syndication can also happen with a lead investor in charge of the round, it is possible to opt for a mass syndication without a lead. This means you are essentially appealing for multiple investors at any single time. With a mass syndication, your business will receive multiple, smaller investments and won’t often have to provide investors any say in the business’ direction and day-to-day running. Therefore, mass syndication without a lead can be a great way to secure investment without losing control of your business.

Because investors still get to enjoy the same economic deal as more conventional angel investors, investors are increasingly interested in this form of investing.

The right terms and valuation

When it comes to mass syndication without a lead, there are two crucial points you need to cover before you start knocking on the doors of investors. First, you must cover the terms for fundraising clearly. You want to approach investors with a clear strategy and plan – since you are looking for multiple investors, you cannot start making up the terms as you go on.

Define the term sheet clearly and make sure it is the same for each investor. This will bring clarity, transparency and effectiveness to your fundraising round. If you haven’t fundraised any money in the past, it is a good idea to seek professional guidance from investment companies to draw up a good and attractive term sheet.

The few things to keep in mind are all about keeping it simply. You don’t want to drive away investors with complicated matters, such as board structure or vesting, and it’s a good idea to stay away from a minimum raise requirement. On the other hand, you want to ensure you deal with things such as a cap on the conversion price if you are dealing with convertible debt.

Second point you need to think about beforehand deals with the valuation. Most start-ups fail to attract the right kind of investment because the valuation is completely off the map. When it comes to mass syndication, it is advisable to value your business slightly below the market price. If you show up with a valuation that is too high, the investors are unlikely going to trust you and the negotiation is over before it even started. Essentially, you’d like the valuation to be a non-talking point – just right for the investor to avoid questioning how you got it.

Check out the video below and learn more on how to valuate your business.

Find the right potential investors

Finally, when you are looking for investments through mass syndication you need to focus your efforts. You cannot simply go around knocking doors – even if you are seeking multiple investments, you must narrow down your search. It is important to think carefully what kind of investor you are looking for and what type of investor would most likely want to invest in your business.

Define your target investors and check out different start-up incubators that might support mass syndication. There are even specialized syndicate investment websites and companies that can help you get started.

Finally, since you won’t have a lead, you also need to make sure you explain the reasoning behind this to your potential investors. Explain the benefits of mass syndication, and why having a lead investor is not only good for your business, but might also be more beneficial for the investor.

Above all, don’t forget to use other investments or your social connections to your advantage during mass syndication. Having no lead doesn’t mean you cannot mention the positive impact you’ve had with investors or the interest you’ve had. Don’t brag and never start giving out specific investment figures to other investors. You want to use other investors as bait not a turn-off. In the end, you might even meet an investor who suggests the option to act as a lead. Be aware of this option and know what you want to do in case someone offers to take on the role.

Don’t forget about crowdfunding

One aspect of mass syndication is to opt for crowdfunding. If you like the idea of not having a tight deadline and maintaining the full control of your business, crowdfunding can be a perfect option for your business.

There are plenty of different platforms making crowdfunding easy and simple for start-ups. Whilst the process is often more focused on getting start-ups started, even an established business could seek investment through these platforms for new product development, for example.

Although crowdfunding is often focused on raising capital by pre-selling products or services, there are certain countries where businesses could even crowdfund equity. For example, in the US you can use platforms such as Fundable to raise equity for your business.

The same points apply to crowdfunding as they do for other mass syndication methods. You must be able to define your reason for seeking investment and outlining the benefits of investing in your company. Don’t use crowdfunding as a last resort, but only opt for it if it fits your business model and your business goals well.


Finally, you should always think carefully when and why you are fundraising in the first place. Many start-ups tend to approach fundraising as something they must do – even established small businesses often fundraise for the sake of fundraising. But seeking investments isn’t always the only way to grow your business.

Furthermore, you need to make sure you are raising money at the right time – this can be crucial in terms of maximizing the benefits to your business, as well as for attracting the most investments.

Assess your need

It is conventional wisdom that a business, which is growing rapidly, can:

  • Use outside money to boost the growth
  • Attract more of the outside money because they have high growth potential

The above has led to many start-ups to think raising outside money is what defines them and helps them grow. But rapid growth is not always achieved by outside money. The crucial point to understand about the above is that you need to first become a business, with rapid growth potential, before you’ll start attracting more money.

Don’t assume that just because you are looking to grow, you must seek investment. Ensure your business has growth potential and then evaluate whether or not this can be boosted by investments.

Furthermore, when you are assessing your need for investment, make sure to consider the attractiveness of your business. Investors invest in businesses with proven growth potential. You won’t be able to find an investor, if your business cannot convince investors of this potential. In fact, if you start knocking the doors before you can convince investors of the real potential, you are likely going to ruin your future investment chances as well.

Find the right moment

You also need to pick the right moment to fundraise, especially when you are seeking investment with no lead investor. You should never start fundraising when you are desperate for the money. Fundraising is a time-consuming task that can put your business operations to a halt. You don’t want to make this distraction too long and costly, and therefore, you should only do it when your business can withstand it. If your business’ survival depends on getting the investment, you are already too late.

The right moment to fundraise is especially crucial when it comes to finding investment without a lead investor. Investors are going to ask tough questions such as “Why are you seeking investment?” and “Why don’t you have a lead?” Answering these questions is much easier if your business survival doesn’t depend on it.


While a lead investor can definitely boost your chances of attracting more investment, as well as bring its own additional benefits to your business, you can seek investment without a lead. Mass syndication is a great way to seek investment when your business is at the right point to attract it. Prepare your business well, make sure your business is ready for investment and search investments from the right investors.

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