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5 Tips on How to Improve Deal Flow

One of the biggest struggles every investor encounters is quality deal flow.

It’s important for people to know that you’re an investor, especially when you first start. However, if you just add “angel investor” to your profile or website, you might attract companies that either don’t fit your thesis or simply aren’t great opportunities.

So how do you hit that sweet spot of attracting tons of deal flow you actually want?

I’ll give you a hint: it all comes down to how you build relationships.

Develop "How can I help you?" attitude and persona

You should always approach relationships with a “give first” attitude. When you meet a founder and hear their story, you should be asking yourself “How can I help this person? What do I have to offer them?”

First, you build a reputation as someone who is truly helpful. People generally prefer to work with someone who approaches opportunities with a “what I can contribute?” attitude.

Second, you also build your reputation as someone that founders can approach. As a result, founders and investors will send more founders your way because you’re a true value add.

Ultimately, this reputation as a true giver and problem solver will naturally attract more deal flow.

Stay in touch with active investors in your industry

Some industry professionals believe that other investors are your competition, and so there’s no reason to help each other.

While many investors do this work solely for themselves, we could all use a little help from our friends.

Co-investors are a great place to start building those relationships. You likely don’t have the exact same investment theses, but they probably overlap in a number of ways. In which case, you might see opportunities that will interest them, and vice versa.

Sometimes I receive emails from founders who might fit my thesis, but I decide not to invest for any number of reasons. If they have a strong team, good business model, address a real problem that represents a big market opportunity, then I will introduce them to another investor that I believe would be a great fit.

Other times I meet a great founder, but I have little knowledge about their sector. If I know another investor who would go completely ga-ga for the company and add a lot of value, I’ll make the introduction.

Down the line, those same investors may forward opportunities to me, too. When founders meet perfect-fit investors, it’s a win-win for everyone!

Create your watchlist of companies and founders

Sometimes you pass on an opportunity because now just isn’t the right time. Maybe you hear about an upcoming founder on a podcast or in an article, but they’re not raising at the moment. Or you meet them at a networking event, but they don’t meet all your criteria yet. Or maybe they sent you their pitch deck a little too soon.

If you have a good feeling about a founder or company, keep track of them however you can. I recommend doing more than just following them on social media or subscribing to their newsletter (although those are good ways to stay up-to-date as well). I suggest asking them to share updates on their progress.

You can also create a separate list or spreadsheet for yourself. It’s even useful before you start investing and don’t have a very clear thesis. If you use a database tool like Airtable, you can easily add tags or categories to the different companies.

Over time, you may start to notice a pattern in what interests you, or maybe even what you’re missing. For example, after six months of adding companies to your database, you may realize that you’re seeing a lot of DTC startups focused on sustainability, but you aren’t meeting as many female founders as you thought you were.

Developing this habit will be extremely useful as you start to make more investments!

Curate your LinkedIn and Twitter feeds

Of all the social media platforms where investors and founders will engage and connect, LinkedIn and Twitter are your best options. For a short while, Clubhouse was a great place to connect live, but now Twitter Spaces does that pretty well.

Being active and engaging on those two platforms are quick ways to build brand recognition and currency (no, I don’t mean tokenizing yourself). If you’re not sure what to post or share, engage with other people.

And it should go without saying, but engage in an honest, constructive manner. Don’t just drop your link in every thread or make demeaning comments. Offer advice, tag someone who might also appreciate the post, or simply thank people for sharing their knowledge.

After appearing in people’s feeds enough times, they will start to remember you (in a positive light). That also builds brand trust, which will help founders feel more comfortable reaching out to you.

Attend Demo Days of top accelerators in your industry

Accelerators help companies of various stages reach a new level of “investability.” After anywhere between 8 to 24 weeks, founders come out of the programs with a tighter business plan, an improved MVP, and/or a sense of product-market fit.

At the end of the accelerator, founders get to show off all their hard work to potential investors at Demo Day.

Many accelerators host their events in person, so do some local research about programs near you so that you can apply to attend their Demo Days. Some, however, will host online conferences that you can attend from anywhere.

Although the objective is to meet founders who are raising (or will be soon), it’s also a great opportunity to meet other investors.

Two men sit at a table. One man wears a black short-sleeved shirt and jeans. He faces a man wearing a light gray jacket and black pants.

Being a great angel investor takes time

These suggestions will increase your changes of attracting quality deal flow, but they definitely require time and effort. Remember: you can’t maintain your reputation as a helpful investor if you don’t make the time to actually help anyone!

Be disciplined about your investments by treating it like a project or job. Set aside time in your day or week to complete tasks such as:

  • Check in on your current portfolio founders

  • Read up on the latest developments in your industries/sectors

  • Respond to tweets, posts, or emails from people asking for advice

It can be an hour every morning, or an entire afternoon a couple days a week. For many angel investors first starting out, this is not their full-time job. Most people start angel investing while they still have another primary source of income. So it’s especially important to set aside time to manage your portfolio and seek out deal flow.

If you're an investor looking for introductions to amazing founders, fill out my investor form for curated deal flow and join Angel Club to meet early stage founders and like-minded angel investors. We're also hosting Open Office Hours with a number of experts to answer your questions about angel investing!

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