Thoughts on startups by investors that
fund them & entrepreneurs that run them

What percentage of a Series A round is typically invested by the lead investor?

This is changing as the whole world of venture/angel/seed funding is rapidly morphing, but typically a ‘real’ Series A round is small enough for one traditional venture fund to do the whole thing itself. Very occasionally, they might split it with another fund, but that would probably be the exception.

What we are often seeing, however, is large-ish “seed” rounds of up to as much as $1-2 million, led by an early-stage seed fund, “super-angel” or angel group, which might put in +/-50% of the round, with the balance made up of other seed funds and value-adding angels (‘super’, ‘grouped’, or otherwise.)

But because the single biggest problem with early-stage funding is ‘getting the first pickle out of the jar’ (that is, getting someone to provide a term sheet and make the first commitment), in recent years an interesting alternative to this has arisen. In unusual (but not unique) cases, a well-respected or high-profile individual angel may be able to successfully lead the first professional funding round of an early-stage startup with a very small investment, accounting for only a small percentage of the round.

I have personally led more than half a dozen rounds of this type, in some cases making up as little as 5-10% of the round. But because I’m a professional, with a pretty good track record and the ability to draft a solid, fair term sheet, and because I can be helpful in introducing the company to other angels and funds, this actually works out to everyone’s advantage.

*original post can be found on Quora @ http://www.quora.com/David-S-Rose/answers *

Written by David S. Rose

user David S. Rose Founder and CEO,
Gust

David has been described as "the Father of Angel Investing in New York" by Crain's New York Business, & a "world conquering entrepreneur" by BusinessWeek. He is a serial entrepreneur & Inc 500 CEO who chairs New York Angels, one of the most active angel investment groups. David is also CEO of Gust.

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