As an investor, your deal flow is your lifeblood. Your success five to ten years down the line depends on the quality of startups you’re meeting today. If you have a healthy pipeline of promising startups, you may just back the next Grab or Canva. If, on the other hand, your pipeline is a trickle of odd leads, you’re more likely to be left in the dust.
This principle applies to all investors, including everyone from angels and family offices to syndicates and venture capitalists. Unfortunately, most investors tend to focus on becoming better at determining the investment-worthiness of the few startups they do meet. While this skill is important, what is arguably even more important is increasing the diversity, quality, and quantity of the founders you meet in the first place.
We’ve thus put together a few quick tips on how to dramatically expand your deal flow.
- Read the headlines. A core skill of investing is reading: You read industry reports, investment memos, white papers, and other relevant content. Reading may also help you source deals. If you are not already, you should scan fundraising news in tech and business publications, such as DealStreetAsia, e27, or Tech in Asia.
While these founders just concluded a round, they may already be fundraising for their next capital infusion, especially if their startup is fast-growing. Sourcing from publicly announced deals like this is also helpful because it serves as social proof: You know that this startup has already been vetted by other investors.
If you would prefer to source earlier stage startups, you can focus on headlines about founders winning pitching or prototype competitions. The signal of the social proof is weaker but it’s still there: You know the founder can sell themselves and their ideas.
- Become a thought leader. You cannot spend all your time reaching out to up-and-coming founders. Ultimately, if you want to scale up your deal flow, you’ll need to increase the amount of founders that reach out to you. Getting a high volume of inbound leads is not just about making your contact information freely available: You need to become an investor that founders aspire to work with.
The key here may sound counter-intuitive: You need to show that you’re not just an investor. Founders across Asia Pacific have easy access to capital of all kinds, after all. In this kind of environment, where there is a wealth of well, wealth, investors must demonstrate that they are equally mentors, strategists, and partners.
The easiest way to showcase the value-add you bring as an investor is through thought leadership activities. You can write a blog post on Medium, contribute an article to an industry publication, or give a talk at a conference. No matter the venue, the content you produce most portray you as a person who huddles shoulder-to-shoulder with your founders in the trenches, providing them with key resources they need to press forward.
- Attend startup events as a designated investor. You can also attend startup events of course, but the best way to do so is not cold. Don’t just show up, in other words. You should reach out to the event organizers beforehand, so you can collaborate on a way for you to participate in a more official capacity.
There are many ways to do so: You could be a speaker, panelist, or moderator. If the event is a competition, you could offer to serve as one of the judges, giving you a low stakes way to listen to many founder pitches. You can be a minor or major sponsor, providing value in cash or in-kind. You can exhibit. If the event has no formal program and it’s more of a forum for open networking, you can even ask to be included on the public roster of expected attendees.
You should participate however you feel most comfortable. The point of this involvement is for you to have higher visibility at the event. That way, founders who are in the process of fundraising can actively seek you out, so you don’t have to rely on your luck at bumping into these entrepreneurs.
Fortunately, there are many great events put on by the startup and tech ecosystem. In Southeast Asia alone, we have quality programming from the likes of Tech in Asia, e27, and ANGIN. For our part, Accelerating Asia is also a key organizing partner of Deal Fridays, along with Enterprise Singapore and the Monetary Authority of Singapore, who are its hosts - we’d love to see you at one of our upcoming events!
- Digitize your introduction requests. The best source for quality leads may be your own personal and professional network. Through the grapevine, you may hear of promising founders that are one or two degrees removed from yourself - friends of friends, or friends of friends of friends, respectively.
In these scenarios, investors would traditionally ask for an email introduction from the common connection. The problem with this approach is that it’s a big ask of their time - people are busy, after all - and that they may be for whatever reason unwilling to make the link.
A better strategy is to go where introduction requests are expected, if not encouraged.
One such place where they are expected is LinkedIn, which offers a “Ask for an introduction” feature to facilitate networking through shared connections. LinkedIn is not alone here: There are many other platforms that offer similar features - be sure to take advantage of them.
One place where these requests are actively welcomed is here at Accelerating Asia. If you navigate to the “Portfolio” page on our website, you’ll find that clicking on any startup profile gives you the option to “Request introduction.” By offering this feature, investors can rest assured that they will be properly introduced to founders after registering their initial interest. It bears repeating here: Please do reach out. We’re eager to connect you with the startup that you’re interested in.
- Become a limited partner (i.e. an investor in a VC fund). Locating the next great startup is tantamount to finding a diamond in the rough. This task is already challenging, and it becomes even more challenging when you go it alone.
Many venture capital firms offer investors the opportunity to become a limited partner in a specific fund, such as 500 Startups. Speaking from our own experience at Accelerating Asia, these partners are essential to our overall success as an organization.
The value this group brings is perhaps rooted in their diversity: We regularly work with angels, syndicates (i.e. groups of angels), family offices, and institutions of all kinds, from venture capitalists and development finance organizations to fund of funds (FoF) and the investment arms of corporations.
We attract such a diverse group of stakeholders because we can increase their deal flow in an instant. From a pool of well over 1000 startup applications per year, we whittle this down to just a handful of startups through a rigorous selection process that involves several rounds of interviews. As you can see from our selectivity rate of 1.5% (an admission rate more competitive than Harvard University), we use quantity to all but guarantee quality.
To become a limited partner, please reach out to us here. We look forward to hearing from you!