Anchor investor

Definition

The first sizable commitment in a raise, whose name pulls the rest in.

Why It Matters

Investors move in convoys, and the anchor is the one who moves first: a respected fund committing early is diligence other investors borrow, and the same round with no anchor is twenty people waiting to see who goes. Ask a prospective anchor directly whether their name may be used with the others, because that permission is most of what the anchor is worth. A raise stuck at soft circles usually does not need more names on the list; it needs one of the names already on it to sign first.

In numbers: A $500,000 anchor from a known fund turns a $1.5M raise from twenty maybes into a round that closes; the last $1M signs in six weeks.