Create more professional opportunities using the VC strategy of Deal Flow

deal flow funnelIt seems today as if everyone knows someone who’s trying to raise money for something. In my experience it’s often an entrepreneurial idea or an effort to take a struggling enterprise to a higher level.   As a business strategy advisor and marketing professional (they do go hand in hand), having good opportunities to meet and engage with new clients requires a great deal of research, follow up, and consideration of when to press harder or move on to other things.

In the start-up world the term ‘Deal Flow’ is used regularly. If you are not familiar with the term:

From Wikipedia: Deal flow (or dealflow) is a term used by finance professionals such as venture capitalists, angel investors, private equity investors and investment bankers to refer to the rate at which they receive business proposals/investment offers. The term is also used not as a measure of rate, but simply to refer to the stream of offers or opportunities as a collective whole. An organization’s deal flow is considered “good” if it results in enough revenue- or equity-generating opportunities to keep the organization functioning at peak capacity.

The most famous and successful venture capital firms regularly receive hundreds of business plans each month. From among these, it is not unusual for a VC firm to actually fund only 0.25%–0.5%. Active angel investment groups will typically receive dozens of plans monthly, but because of the much smaller number of plans compared to VCs they tend to fund a somewhat higher percentage (0.5%–1.0%). Once a company makes it through the group’s screening process, however and is invited to present to the group’s full membership, its chances of getting funded rise to about 18%, according to the University of New Hampshire’s Center for Venture Research.

Sounds familiar right? Any good business development person knows that having a robust and replenish-able source of good leads is essential. Yet many business development professionals are trained to think and act in a transactional manner and not in a consultative or strategic manner.

When I look at a ‘deal’ for a company that is seeking outside investment I always consider my contribution as a business strategist to be equally as important as trying to match an appropriate investor with the appropriate opportunity. What value can I bring to the table? And if the answer is – not all that much, then it is obviously not the right opportunity for me, or for the company I am trying to help.

The point I am making is that whether it is business development, sales, or capital raising/deal-making in the investment world, you have to kiss a lot of frogs before finding your prince. But if you look at it through the lens of how you personally can add value you will be able to much more quickly eliminate dead ends and time-wasting opportunities.

Saying ‘not for me’ is powerful and it’s too easy to be distracted by flash and dazzle. Be better about evaluating your own opportunities and you’ll have a much better batting average.

What do you do to parse good opportunities from one’s that do not fit your skill set?

About markkolier

Futurist, entrepreneur, left lane driver
This entry was posted in Career Development and tagged , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s