{"id":218183,"date":"2022-10-26T13:32:05","date_gmt":"2022-10-26T00:32:05","guid":{"rendered":"https:\/\/legalvision.co.nz\/?p=218183"},"modified":"2024-11-06T13:30:28","modified_gmt":"2024-11-06T00:30:28","slug":"lead-investors","status":"publish","type":"post","link":"https:\/\/legalvision.co.nz\/capital-raising\/lead-investors\/","title":{"rendered":"What Are Lead Investors and Their Role in a Capital Raise in NZ?"},"content":{"rendered":"\n

If you are a startup founder in New Zealand, you have probably thought about bringing on investors. While there are many benefits to bringing on investors, your business may need more time before it is ready for external investment. Hence, this article will explain the role of lead investors during capital raising<\/a>.<\/p>\n\n\n\n

What Are Lead Investors?<\/h2>\n\n\n\n

Lead investors are often the investor who commits the most significant amount of capital to your raise. The lead investor is usually an experienced investor who has previously injected cash into startup businesses. <\/p>\n\n\n\n

Typically you will negotiate the term sheet (which sets out the key commercial terms of your raise) with the lead investor only. Typically, other investors will then follow the same terms. <\/p>\n\n\n\n

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Private equity and venture capital firms often act as lead investor. These firms often have a standard process to follow and requirements for their investment. Such processes are largely non-negotiable depending on the stage of your start-up.<\/p>\n<\/div>\n\n\n\n

Role of Lead Investors<\/h2>\n\n\n\n

Investors will often lead a funding round and effectively act on behalf of other investors. The lead investor will typically conduct due diligence<\/a> on the startup. Due diligence can:<\/p>\n\n\n\n