For angel investors, navigating the complex world of deal flow management and network building is important for success. Sourcing promising opportunities and building strong relationships makes all the difference on the road to investment success.
This blog will advise on best practices on how to manage deal flow and networks efficiently concerning angel investing.
Deal flow, basically, is all about sourcing, evaluating, and choosing investment opportunities. Managing deal flow effectively means developing systems and processes to deal with this influx of potential deals. Angel investors need to have a few steps in mind while managing deal flow.
Defining Investment Criteria
An efficient angel investor defines his investment criteria and states his investment thesis explicitly. This includes –
- their preferences for industries
- stages preferred in a start-up
- target returns on investments
- specific focus by geography.
This will help you filter and prioritize deals according to your investment goal and determine the investment criteria easily.
Establish mechanisms for screening
You should also create screening criteria that will allow you to filter incoming opportunities within a short period. Such screening criteria might include team expertise, scalability, market size, and traction. Deploying tools and platforms supporting the technological processing of your initial screening allows you to appropriately assess the incoming opportunities.
Creating a Diversified Sourcing Pipeline
Tap other channels of sourcing deals, such as your personal networks, venture capital firms, online platforms, angel groups, and accelerators. Attending industry events, pitch competitions, and conferences significantly expands network and unlocks new opportunities that can be added to the investment profile.
Create deal flow management tools
Finally, to have effective deal flow management, you ought to have a strong system that monitors and manages it. While the deal flow management tool system can be as simple as a spreadsheet, a software solution is specifically tailored toward investor or private equity deal tracking software. You should also, from time to time, review and update your deal pipeline so that follow-ups and decisions are made on time.
Once you know how to manage deal flow, the investment becomes relatively simple. After all, the potential to connect with others is what keeps the investment alive. Networking is one of the most important assets an angel investor possesses as it allows for deal flow, potential co-investors, and industry networking. To successfully engage in angel investing, you need to employ strategies that build and maintain networks.
Go to industry events
Going to conferences, industry events, and meetups is probably the easiest way to network. Picking conferences, meetups, and industry events that fit your target sectors can be challenging. However, it remains an excellent opportunity to connect with entrepreneurs, fellow investors, and other key players in the startup ecosystem.
Joining angel investor groups
Another tried and tested approach to building networks is joining an angel investor group or syndicate to pool resources and share due diligence efforts. Communities provide a supportive environment for learning, co-investing opportunities, and sharing deals.
Online platforms
You can establish a powerful network by contacting proper platforms and social networks meant for angel investors. You can count on the use of online platforms like AngelList, Gust, Startup Steroid, and LinkedIn. Build your network by participating in discussions, sharing insights, and demonstrating your expertise to attract potential collaborators and co-investors.
Contacting entrepreneurs
This will connect you to other people, especially those who may become potential collaborators and co-investors. It enables establishing connections with the founders and startups’ teams even when your investment is slow. Offering mentorship, advice, and introducing valuable contacts in your network increases the possibility of searching for beneficial opportunities for your investment portfolio. Moreover, rapport building with entrepreneurs may lead to future investment opportunities or referrals.
You can also expand your network to accelerators, corporate innovation programs, incubators, and academia. Partnering with these becomes an avenue to deal flow and industry expertise and perhaps even tracking them down for subsequent rounds of funding.
Conclusion
In conclusion, managing deal flow and building networks are key skills in the process of scouting and capitalizing on promising investment opportunities for the angel investor. This active engagement in the startup ecosystem with well-defined investment criteria and efficient deal-flow management processes can give an angel investor a fair chance to succeed. That’s how they can have an impact in early-stage investing.
Ready to optimize your deal flow strategy? Schedule a consultation with Startup Steroid to refine your investment criteria and streamline your deal sourcing process.
