I am Still an Egg, Mr Investor

We believe that the strongest founder-investor relationships are built on more than capital. Early-stage companies often need one clear investor voice that can bring conviction, context and alignment when the company is still taking shape. 

This piece from Rahul Chandra explores why a champion investor matters in the startup journey, especially in the difficult middle phase where growth expectations rise, ownership changes and founders need active support rather than passive capital.

“Don’t count your chickens before they hatch” is not necessarily only about counting. It also refers to the fact that, under this assumption, you start treating the eggs like chicks.

When a startup is young, more than capital, it needs a champion investor to tell the world that it is still an egg, but that all systems are in place for it to hatch into a strong company. This is one reason why startups need a champion investor early in their journey.

Often, a startup gets a syndicate of angels or seed investors, but no one steps up to take a lead role. This puts the startup in a good but not great zone. In Series A or B rounds, growth realisation is often compounded by a lead investor who takes it upon themselves to ask for growth and help solve the impediments preventing that growth.

As a result, a good Series A round can be one of the strongest phases of a startup journey because the demand for progress and the delivery against it are at a peak. A lead investor is someone who takes primary responsibility for aligning various interests from investors, stands to lose the most and wakes up every morning thinking about your progress.

This champion then dedicates bandwidth to the startup for product strategy, hires, capital planning and fundraising. The alignment is ideal because, in any event of capital requirement, the main voice as an inside investor belongs to the champion: someone who can attest to the credibility of the entrepreneur, the genuineness of the growth pattern, and the future promise and expectation of the company.

This distinction is important in the lead investor vs champion investor conversation. A lead investor may coordinate a round, but a champion investor continues to show up when the company needs active judgment, credibility and support.

This support, along with continued capital commitment, is invaluable for incoming investors. When all goes well, the startup continues to progress. But as capital continues to stack up, the investor base can become a pool with self-preservation bias. By this time, the champion’s ability to contribute capital may have reduced, and they may not be able to maintain their pro rata.

With the changing needs of the startup and the company’s apparent maturity, the champion steps back and joins the cacophony of voices. There is no clear voice coming out of the investor pool unless the board process is highly efficient or shareholder unanimity is crystal clear. The agenda is then set in isolation or in anticipation of a greater good by the founders.

Now the company is large, the founders have single-digit ownership, and growth expectations are all over the place. No one agrees, and everyone agrees to disagree. Life continues, but growth is sideways.

Placing the interest of a growing business first is of course paramount because the chicken is not yet hatched, and until then the entire cast is on standby. ”

Is this a structural issue for high-growth startups? Are we missing a class of investors who are ideal during the phase where a startup goes from just beginning to scale to where operations have truly matured?

Until such a class of investor appears, everyone concerned should play a more helpful role. For early-stage investors, this means recognising that startup funding is not only about capital availability, but also about active alignment, responsibility and founder support.

Recognising the true maturity of the company, and accordingly the areas of focus for shareholders, will help build a stronger foundation. A shareholder voice of unanimity, represented by an engaged investor board member, is required.

This is where founder investor alignment strategies matter. A strong founder investor relationship is not built only during fundraising. It is built in the difficult middle, when decisions become complicated, ownership changes, and the company needs someone who can bring clarity to the room.

Late-stage investors CAN invest more and call the shots, but sleeve-rolling from them is happening in corporate development-type areas - and the engagement is still a process... inorganic, unrealistic and distant. And everyone is managing self-interest first.”

The larger lesson here is that investor alignment isn’t something that can be left to chance as companies scale. A startup may have many investors on the cap table, but without engaged champions, decision-making can become fragmented when clarity is most needed. 

The best investors understand that founder support isn’t limited to the round they lead, but rather continues through hiring, strategy, capital planning, difficult board conversations and moments of uncertainty, when the company still needs someone willing to stay close to the business.