How I Source Deals

Every morning, I sit down at this computer and try to find the next Google. But where is it?

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When it comes to startups, I cast a very wide net. In a typical month, I look at about 200 companies.

I choose one.

Here are some of the places where I like to fish:

1) Syndicates. I’m a member of almost 100 of these investment groups, which lets me see a ton of deals.

Syndicate leads have usually been investing a lot longer than I. Their networks are extensive.

You can plug into those networks, for a price. You pay 20% of any gains to the syndicate lead.

Especially for newer angels, syndicates are a must. They give you a network on day 1 that would take years to build.

Some angels don’t want to pay the fees syndicates charge. This is foolish unless you already have an amazing network.

80% of something is a lot better than 100% of nothing!

Look for syndicate leads who have been investing at least 5 years with at least 1 unicorn. They have the best networks.

The best syndicate I know of is Jason Calacanis’, here.

2) Venture firms. I have relationships with a number of venture capital firms from attending events and doing deals together.

I send them deals I’m investing in, and they reciprocate. I’ve found some awesome deals this way.

3) Seedscout. Seedscout is an awesome new platform where founders can request intros to investors.

Founders have to pay to use the platform, which eliminates a lot of unserious people. This leaves some really first rate startups.

And unlike a syndicate, there’s no 20% carry to pay.

4) Cold inbound. Unfortunately, I get way too many messages to reply to them all.

I know, I’m sorry!

These entrepreneurs need help. And you never know which one of them might be the next Sergey Brin.

I was able to keep up with these messages at first. But as my network grew over time, so did the time commitment.

I found myself spending hours responding to messages and taking meetings with little to show for it. So I gave myself permission to not respond unless the founder has a warm intro.

But from time to time, I’ll dip into the pool of cold messages when I see something that interests me. You never know which one might be a gem!

For angels and VC’s, looking at a huge number of deals is critical. The best deal out of 10 versus the best deal out of 200 will look very different.

Cast that net wide and you just might come up with a whale of your own!

Investors: how do you source deals? Founders: how do you find investors?

Leave a comment at the bottom and let me know!

More on tech:

‘I Heard 100 No’s a Day’: How Travis Kalanick Built Uber

Bridge Rounds: Yea or Nay?

The Startup Green Lights

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Photo: “Needle In A Haystack” by t_buchtele is licensed under CC BY-NC-ND 2.0.


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