How to Generate or Attract Deal Flow for Angel Investors
Every new Angel investor struggles to find consistent, quality deals to review and in which to invest. Once you have a diverse or focused flow in your desired area, go after quality—build/narrow your thesis and create a picking/investing strategy rather than looking at areas of interest. Of course, both are important, but if you’re a VC, and assuming you already have good flow, picking is what keeps you in the business.
How to Create a Deal Flow
● Finalize your investment thesis and areas you want to explore.
● Reach out to accelerators.
● Participate in and become part of angel groups.
● Participate in local or remote demo days.
AngelList, Stonks, Republic—all of these are great platforms that give you access to various vetted startups. These platforms publicly market deals to accredited investors and disclose how much is being raised and at what terms.
AngelList is a platform where fund managers or syndicate leads can create an LP audience and provide access to deals from their own network. It’s a very good place to get exposure to deal flow, invest, and participate in a few deals.
Stonks works similarly, but here, various accelerators and startups pitch deals to angels. The biggest difference is you can reach out directly to founders to connect and bond rather than connecting through an intermediary. If your intention is to create a personal network, and you can invest time and resources, this is a good path.
Republic allows people to invest in wide variety of startups across real estate, crypto, and video game. It is marketplace platform with $100 minimums and early-stage products willing to do mass market funding raising to achieve marketing objective as secondary goal.
Quality Deal Flow
Everyone is after quality deal flow. As you spend time, invest, and actively participate, you’ll most likely get connected to super angels, which are networks that will help give you more quality deals.
How do you know a deal you’re considering is a quality deal? Look for signals around quick growth, established angel participation, product traction, and maybe early-stage VCs backing the pre-seed/seed stage firms.
Social media sites like Twitter and LinkedIn are the best venues to follow top tier angels, investors and founders. There, you see their areas of interest, engage with them, and provide value. As you develop these connections, they’ll invite you to co-invest in their deals.
But if you want to avoid all the legwork, the best path to kick off your angel investing journey would be AngelList, Stonks, and Republic.
What Other Paths Do Angels Follow?
In the early days, you’ll be hustling for meetings, attending demo days, cold-emailing startup CEOs, and putting in tons of effort to build a personal brand—it feels like a never-ending process.
Build a Network
Building a network of communities and partners to access ecosystems in various geographies is an effective way to generate inbound deal flow. Being part of active founders’ and angels’ mailing lists, arranging meetups, and mapping follow-on investors to recommend startups that may be ready for the next round of funding are other things on which you should focus.
Build Your Process
Build a process you can follow and scale over a period of time:
Join two demo days and one or two founder/angel meetups or product management meetups (just three to five meetings a month).
Join pitch competitions as a judge or as an audience member to begin with.
Partner with accelerators.
Volunteer as mentor.
Form partnerships to share deal flow.
Host small, private networking events.
Create Content
Another way to kick-off your angel investor journey could be to create consistent, deep content on various startup topics. Options include:
Blogging
Writing (by invitation) on well-known newsletters
Starting your own newsletter with a topic close to your heart
Track Activity
Super angels use focused methods and data-driven approaches. They track news, and monitor web activity and popular ecosystem events to track and identify new startups in their interest area. They also finalize specific criteria for companies in which they have interest by tracking them with Google alerts or setting LinkedIn sales navigator filters.
Attend Networking Events
Networking events are considered a slow process, but if you attend them consistently over a year, you’ll be surprised at the network you create. You can meet new people across demo days, accelerators, dinners, and speaking events. Whenever you meet promising people, reach out to them to set up a one-to-one meeting to get to know them more.
Leverage Social Media
Utilize social media to provide opinions and get to know more people online. Maybe produce short posts that are helpful to people in your area(s) of interest. Create value for founders before you invest by sharing insights, showing empathy around their pain points, and providing examples of how other founders have dealt with common product-building, fundraising, and recruiting problems.
Build a Network of Co-Investors
A group of likeminded people interested in the same areas leads to more deal flow. Before you lead any deals, you should initially find lead investors you can help to fill their round or commit to as a co-investor.
As you review deals consistently and learn about evaluation strategies from other experienced investors, you’ll form a muscle memory in terms of what you are seeking. However, it’s always a good strategy to write and record your investment thesis and update it regularly as your investing acumen matures. You can read about my investment thesis here: Angel Investing: How to Choose the Right Opportunity