When starting off as an angel investor, deal flow and sourcing are among the biggest determinants of success. For the unversed, a deal flow refers to the number of investment opportunities available to you.
Building a good deal sourcing funnel will present you with more options to invest and learn to weed out deals as well.
If you are a budding angel investor, resort to these strategies for a steady deal flow.
Make the most of social media
Follow relevant individuals in the ecosystem and leverage social media to stay updated on discussions around trends and promising startups. Angels and VCs often use platforms like Twitter and Linkedin to throw light on happenings in the ecosystem or even interesting meetings they’ve had with founders. These can also serve as a channel to source startup deals.
You can also voice your opinions and engage with others online to build a relationship.
Build relationships with co-investors
After closing investment deals, do stay in touch with your co-investors as it can ensure access to more deals through them. You can also follow recent investments of active investors in your field and try to get an introduction to them via your network.
Unlike the bourses, information regarding private market deals is not always publicly available and is often circulated through insider networks. That is why building good relationships with other leads, investors, and founders can lead to them scouting deals for you and inviting you to make key investments.
Attend demo days of top accelerators
Top accelerators often organize demo days where startups come to pitch and showcase their businesses to raise funds. Taking part in such events will be helpful in gaining access to different kinds of startups that are actively looking for funds.
One can also go to startup-related events throughout the year to network with key stakeholders of the ecosystem. You should then follow up with them to discuss startup trends, investment opportunities, and any possible deals they might have.
Be motivated to help startups
Experienced investors believe that maintaining a “pay it forward" attitude can go a long way in private market investment as it will directly impact how you approach the deals. Naturally, your dedication spreads through word-of-mouth in founder networks and will make a huge difference as you go on to make more investments. Founders will reach out to investors who have the startup’s best interests in mind.
Also, investors need to make it clear what they can bring to the table other than just money because founders today are seeking “smart” capital more than anything.
Manage it like a project
As most investors pursue angel investment in addition to their full-time job, it is important to set aside time to focus on investing in startups and treat it as an important project.
Thinking of it as a hobby can negatively influence your approach to startup investment. More importantly, find significant time to network and connect with startup founders and investors and to examine your deal before diving into the granular details of investment.
(Explore Learn by LetsVenture, a destination portal for lessons across stages of angel investing and free resources)