How to source the best deals | Startup investor 101
Deal sourcing is for many the most important part of the investment process
How to source deals is one of the most important questions for an investor, and also one of the most daunting for a budding investor.
In a previous edition I explained how to set up your budget as you start investing in private companies, if you have not read it yet, check it out.
Once the budget question has been addressed, the next step and, once again, one of the most important steps, if not the most important according to top VCs, is to source deals.
In the VC industry there is a belief, and when I say belief I should say a religion, that an investor wants to see as many deals as possible and that the key to success is the largest quality deal flow possible.
I don’t tend to agree with this philosophy as I believe resources are limited and there is a decreasing marginal return in allocating time, effort, energy in deal sourcing versus getting involved in the company to help it become successful (or just go for a walk!).
Deal sourcing for private investors got way easier in the last 10 years thanks to changes in regulations and also technology innovation. It used to be very difficult for retail investors -and to some degree accredited investors- to access deals in private companies, but in most geographies it is now way more approachable, both in terms of minimum investments and access to deal flow.
I will explore in details each of the different channels to source deals in subsequent editions but here is a primer showing you how you can get exposure to private companies, directly or indirectly.
1) Crowdfunding platforms,
2) Angel groups,
3) Investment advisors,
4) Companies participating in startups competition,
5) Linkedin profile – business angel / investor,
6) Companies in incubators and accelerators,
7) VC/PE funds,
8) Publicly traded PE firms (such as Blackstone).
So there are MANY ways to invest in private companies and/or get exposure to private markets.
Next week I will go in details on how to source deals through crowdfunding platforms. As I am sure it is pretty clear to most of you by now, I am a big fan of this channel! I will tell you more about why I love equity crowdfunding platforms so much and the benefits you can get from using them.
If you have not read the newsletter regarding defining your investment thesis, read it now as it is also a key step in investing in private markets.
You can have a look to at my YT channel for more insights on investing as well as wonderful interviews of entrepreneurs, investors, executives…
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Agree 100% : I don’t tend to agree with this philosophy as I believe resources are limited and there is a decreasing marginal return in allocating time, effort, energy in deal sourcing versus getting involved in the company to help it become successful (or just go for a walk!).
Agree 100% : I don’t tend to agree with this philosophy as I believe resources are limited and there is a decreasing marginal return in allocating time, effort, energy in deal sourcing versus getting involved in the company to help it become successful (or just go for a walk!).