Linnea Roberts spent 30 years of her career working in investment banking, part of which was spent on Wall Street as a Partner in the technology sector at Goldman Sachs. In her role, she led startups from launch to IPO. Yet Roberts realized that she had never personally made an investment in the venture asset class.
“I decided to put my pocketbook where my mouth is,” says Roberts, who created the women founder-focused fund, GingerBread Capital. Prior to launch, Roberts’ first fear of investing as a venture capitalist was deal flow. Fortunately, it didn’t end up an issue.
“For once in my life, I was five minutes early to a party,” jokes Roberts. GingerBread Capital launched in 2017, so by the time ‘where are the women in venture?’ became a zeitgeist issue, her fund was already there. “Deal flow is not a problem for us,” says Roberts, but nothing infuriates her more than the flippant comments about “there just aren’t enough women founders”. “There are plenty of opportunities,” she says.
Whether you’re worried about deal flow based on impact alignment or because you’re brand new and have no idea what to do, here are five methods to get that pipeline flowing.
Create open access for founders
“We really believe in open access,” says Shauntel Garvey, co-founder and general partner at Reach Capital. “Some venture capitalists feel you need a warm referral.”
A warm referral is usually a personal introduction, ideally from someone you trust, who can vouch why a founder or startup would be a good investment. Warm referrals can certainly be effective, but you may not have a network in place to even bring you warm referrals if you’re just starting out sourcing deals.
Garvey recommends you allow for open access by having an application portal on your fund’s website. Angel investors could have a personal website that allows for applications as well. The only way to get those inbound requests is to be a known entity, even if you’re just starting out.
Have an active online presence
“Try to make yourself as publicly available as possible,” says Austin Clements, managing partner of On Purpose Ventures. “That way you can find things you may not otherwise be able to get to directly.”
One of the simplest ways to do this is with a website, social media presence, and to write on public forums like Medium, which Clements does himself. Of course just having a social media presence and website alone won’t do the trick. You need to be active and engage with other investors, founders, and even the media.
Using Twitter to follow and organically engage with reporters covering startups, VC, and angel investors may lead to you being used as a source in a story, which other investors and founders would read that flows back to possible pitches to you.
Once you get these basics down for yourself, you should also be engaging with other VCs or angel investors. The simplest way to do this is by joining a network.
Join a network
Megan Ananian, The Helm’s Head of Membership, recommends that aspiring—or even experienced—angel investors join a network.
“One of the great things about angel networks is you get curated deal flow,” explains Ananian. “For The Helm we look at thousands of companies a year and we only introduce the 12 to 20 best to our angels, so you’re paying for quality deal curation, which is true of most networks.”
The Helm is New York City-based, but there are angel networks all over the country. A simple Google search will get you started on the exploration of networks in your area. Asking anyone you know who is an angel investor is another good way to source network options.
VCs and angels aren’t mutually exclusive entities either. As an angel investor, you should have VCs within your extended network, possibly by investing in a VC fund (like The Helm) to diversify your own holdings, and VCs should certainly know angel investors. Those relationships could lead to possible deal flow as a founder’s company grows and continues raising capital.
Attend (and mentor) at an accelerator
Accelerators might be a popular concept among founders as a chance to showcase your company and get funding, but they’re just as important for investors.
“They’re a great hub between founders and investors and specifically people who are interested in your industry,” says Lee. “For example, if you want to know all the FinTech startups or all the food tech startups or all the digital health startups.”
37 Angles lists all the New York City-based accelerators by sector.
While there’s certainly access to deal flow at an accelerator, Lee points out that there is also mentoring opportunities and events that are beneficial to both founders and investors and can help build your network as an investor.
Clements also sees the importance in providing mentorship as both an investor and as a way of giving back. He serves as managing director for Grid 110, a cohort-based accelerator in Los Angeles for early-stage entrepreneurs.
Sara Deshpande, partner at Maven Ventures, found and invested in Carrot Fertility, which she saw pitched at Y Combinator, a well-known startup accelerator.
Ask within your network and in the field
“The best deals come from being very proactive and reaching out to your network in different categories,” says Clements. Your network doesn’t have to just be fellow VCs. In fact, it should go far beyond other investors and to people directly in the field in which you want to invest.
“Ask your network, ‘who are the smartest people working on such-and-such’ whatever you’re interested in,” says Clements. “And ask people in the field ‘who do you know that’s doing something innovative?’”
A final consideration as an investor is how appealing your network will be to a founder. “Because VC’s have big networks and know a lot of people, they can often open up doors and help founders skip steps in finding new customers and new challenges,” says Clements.
Investing your time and energy into building a strong network with a proven track record of helping your founders will be a calling card to source and secure deals.
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