Brian Nichols is the co-founder of Angel Squad, a community where you’ll learn how to angel invest and get a chance to invest as little as $1k into Hustle Fund's top performing early-stage startups

How many VCs does it take to screw in a lightbulb? "Well, who is the lead?"

That joke captures how fundraising used to work. A lead investor was everything. Without one, you were stuck. With the right one, everyone else piled in. The entire system ran on signaling, and founders had almost no leverage.

But that world is disappearing fast. And if you are an angel investor still waiting for a "lead" before committing to a deal, you might be playing yesterday's game.

How It Used to Work

Eric Bahn, co-founder of Hustle Fund, has watched this evolution over 25 years. Back in the late 1990s, founders who wanted to raise had fewer than 100 VC firms to choose from. Maybe half of those were reputable.

A lead investor typically covered 30% to 80% of a round. In exchange, they got significant equity and set all the terms. The valuation. The preferences. The liquidation stack. Everything.

Once a founder secured a lead from a reputable firm, other investors jumped on the bandwagon. If the startup could not find a lead, other investors backed away. This created a brutal dynamic where founders who needed money were forced to accept whatever terms the lead dictated or risk not raising at all.

This leverage made many VCs lazy. Instead of doing independent diligence, they were momentum investors. "As soon as you get a lead, let me know" was the standard non-answer that really meant no.

Elizabeth Yin has talked about this pattern from the founder side. When she was raising for her startup, she was initially excited to hear investors say they were "committed if there is a lead." It took her a while to realize that this was not a real commitment. It was the easiest way to say no without actually saying no. If Sequoia gave a term sheet, of course everyone would want in. But that conditional commitment was worth nothing on its own.

What Changed

Two things fundamentally shifted the power dynamic.

First, Y Combinator popularized SAFE notes. A SAFE (Simple Agreement for Future Equity) is basically an IOU. The investor gives the founder money now. When a bigger round happens later, that money converts into equity. There is minimal legal paperwork. The terms are simple. Founders can set the valuation cap themselves.

This was a game changer. Founders no longer needed someone to "lead" and set terms. They could set their own terms, raise on a SAFE, and get money in the door without the legal overhead of a priced round. Elizabeth Yin has pointed out that the concept of a fundraising "round" is basically dead at the early stages. Most raises she sees happen on SAFEs or notes, even from well-known larger firms.

Second, the number of potential investors exploded. Instead of 100 firms, there are now thousands of funds looking to invest in early-stage companies. There are more angel investors than ever. There is crowdfunding, accelerators, friends and family rounds, and syndicates. Founders have options.

Because founders have more choices, they can select investors for reasons beyond just the check. They can optimize for value-add, domain expertise, network, or just someone who is genuinely supportive and responsive.

What This Means for Angel Investors

This shift is enormously positive for angels. In the old world, angel investors were often irrelevant. The lead investor called all the shots, and small checks were an afterthought.

In the new world, a founder raising on SAFEs can accept your $5,000 or $10,000 check with almost zero friction. There is no waiting for a lead. There is no complex legal process. You agree on a valuation cap, sign the SAFE, and wire the money.

This also means you should not be waiting for a "signal" from a brand-name VC before committing. As we have covered in previous articles, following big-name VCs at the early stage is not correlated with better outcomes anyway. The signal is basically noise at pre-seed and seed.

Your diligence should be independent. Evaluate the team, the market, the unit economics, and the traction on your own merits. If the deal makes sense to you, the absence of a lead investor should not be a dealbreaker. In fact, getting in before the big names show up is often how you get the best entry prices.

The VC world has become a service industry. Funds hire specialists to support portfolio founders. They compete on value-add, not just capital. And founders have the leverage to choose who they work with. If you want to be part of that new ecosystem as an angel investor, Angel Squad gives you the deal flow, education, and community to invest alongside Hustle Fund's team. Check it out at hustlefund.vc/squad.

The old model gave all the power to VCs. The new model gives it back to founders and the investors who actually add value.