An anchor investor is the lead or first major investor in a round whose commitment signals credibility and enables other investors to follow. Typically a tier-1 venture firm, prominent angel, or strategic investor whose reputation and conviction validate the deal for the broader market. Anchor investors are especially important at oversubscribed rounds (anchor signals which round to pay attention to) and at challenging fundraises (anchor's commitment unlocks reluctant follow-on investors). The anchor's role is partly capital and partly credibility-signaling for the rest of the round.
The function:
Credibility validation: anchor's reputation signals that the deal is real and worth attention.
Pricing anchor: anchor's valuation...