minute read

what is venture capital deal flow and how to increase it

If you’re a venture capitalist, finding high-quality deal flow is essential to your success. In this article, we’ll define deal flow and explain what venture capitalists are looking for when they consider investing in a company. We’ll also offer tips for building a strong deal flow pipeline.

In this article we will cover the next topics​
Deal flow

What is deal flow?

In the venture capital business , deal flow is a term used to describe the number and quality of potential investment opportunities that a venture capitalist has access to. Good deal flow is essential for any venture capitalist, as it allows them to screen more deals and find the best ones to invest in.

Background information: In its simplest form, deal flow can be thought of as the number and quality of investment opportunities that a venture capitalist has access to. As a result, it is important for venture capitalists to have good deal flow so they can focus on looking at the best deals rather than having to spend time searching for potential investments.

How to increase deal flow for venture capitalists

Deal flow is defined as “the rate at which potential investment opportunities are identified and presented to investors.” This means that if you have more deal flow, then you can find more promising investments. 

How do USA entrepreneurs increase their deal flow?

The number one way is by developing connections within the industry. It’s best to start this as soon as possible. Another way is by coming up with new investment ideas and pitching them to anyone you can, such as successful businessmen, investors, etc. This will help you build a bigger network of investors who may want to invest in your company later on.

Even better – you can sign up to Qilindo.com and join our large startup network, that way your idea will get exposure to potential investors and you’ll be on your way to becoming an entrepreneur.

How do international entrepreneurs increase their deal flow?

It is very difficult for international entrepreneurs to increase their deal flow. It doesn’t help that they naturally have a smaller network of investors and businessmen to pitch to. The best way to get your name out there is by going through a VC directory, such as VentureSource , and pitching the companies listed in there.

How to improve deal sourcing

The strategies for finding new leads can vary, but effective deal sourcing always starts with your network. The more connections you have, the more deals you’ll be able to find.
“It’s not about how many people you know; it’s about who knows you.”
– Bryan Franklin, co-founder of Franklin Corporate Access

Here are some strategies that Bryan Franklin, co-founder of Franklin Corporate Access, suggests to improve deal sourcing:

    • Start with your existing network and work outward. Think about the different people in your network and ask if they know anyone who works at a potential client or has worked at a potential client in the past.
    • Enlist your network. Send an email to all of the different people in your network, asking them if they know anyone that could be useful for your business.
    • Attend events relevant to clients and their industry
    • Use social media tools
    • Talk to contacts about potential deals you’re working on
    • Be proactive, not passive
    • Don’t be afraid to ask for referrals
    • Get referrals from your existing network

How do international entrepreneurs increase their deal flow?

Research everything yourself

Although most investors will have associates that do some of the legwork, you should always take a good look at potential investments yourself. After all, it is your money.

Perform background checks before you get involved

Although it may be tempting to invest in the first company that comes along, do research to ensure they are legitimate and have a real chance of success rather than being too good to be true.

Find deal flow by networking with others

Not only should you look for companies yourself, but it is important to network with other investors and partners to find new deals as well.

Always have a plan B if your deal flow suddenly dries up

Sometimes, even the best company list can suddenly dry up one day without any warning, so be ready by having an alternative plan for finding new deals.

What are venture capitalists looking for?

The best companies to invest in are those that have both high growth potential and the ability to scale quickly. If a company’s revenue is projected to grow exponentially over time, then it will be an appealing investment candidate for venture capitalists. Venture capitalists are also seeking businesses with the means to generate high returns on their investments at a relatively fast pace.

Although there are no hard and fast rules for what venture capitalists are looking for, many seek companies with strong leaders who have a clear vision of where they want to take their company. Venture capital firms will attempt to increase their investment by offering more favorable terms.

The idea is that the company’s management team will find it easier to attract additional sources of capital if a venture capital firm has already made an investment. Venture capitalists are also drawn to companies that have a strong customer base and a cost effective business model. The best companies have the ability to scale their operations quickly, allowing them to generate large returns on their investments relatively fast.

When looking for potential partners, firms typically examine a company’s management team, the industry it operates in and its business model. Venture capital firms seek out companies with strong leaders that have a clear vision of where they want to take their business. 


Want to See More?

Sign up as an investor or add your startup to gain full access.
It’s absolutely free!

Don't Miss An Opportunity

Sign up as a investor and gain full access. It’s absolutely free!

New Report