Strategy & Portfolio
Deal Sourcing
The process by which VCs identify and access new investment opportunities.
Deal sourcing encompasses all the methods VCs use to discover and evaluate potential investments. Sources include proprietary network referrals, outbound prospecting, accelerator demo days, conferences, cold inbound from founders, and increasingly, data-driven identification using tools that track company signals. The quality of deal flow is often more important than volume — top firms see thousands of companies but invest in fewer than 1%.
In Practice
A seed fund's deal sourcing mix: 40% from founder/VC referrals, 25% from portfolio company intros, 20% from outbound research, 10% from accelerators, 5% from cold inbound.
Why It Matters
Proprietary deal flow is a key competitive advantage. Funds that see the best deals first and have the reputation to win them consistently outperform those competing in widely-shopped processes.
Related Concepts
Further Reading
Angel Syndicates Explained: How They Work and When to Join
A complete guide to angel syndicates and SPVs — how they're structured, what carry and fees you'll pay, the pros and cons vs. direct investing, and how to evaluate syndicate leads.
How VC Firms Are Structured: Roles, Teams, and Decision-Making
GP/LP structure, investment committees, partner dynamics, consensus vs conviction—a complete breakdown of how venture capital firms organize and make investment decisions.
What Is a Venture Partner and What Do They Actually Do?
Part-time vs full-time, sourcing vs investing, carry allocation—demystifying one of the most misunderstood roles in venture capital and how to become one.
The Venture Capital Career Path Explained
From analyst to managing partner: the real timeline, what each level does, how promotions work, and the 'up or out' dynamics that shape VC careers.
What LPs Actually Care About When Investing in VC Funds
DPI vs TVPI, track record, team stability, differentiated access, fund size discipline—here's what limited partners actually evaluate when committing to a venture fund.
How VCs Source Deals: The Mechanics of Deal Flow
Inbound vs outbound, warm intros, scout networks, thesis-driven sourcing—here's how top-tier venture firms actually find the companies they invest in.
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