Your best sourcing tips

What are some of your best tips for sourcing? I've listed some of mine below. I'm at a VC fund so this will be somewhat geared towards that but happy to make this a thread for PE sourcing as well as I suspect that will be relevant for more people – if you’re going to contribute tips maybe start by specifying your role so that we can easily filter by relevance.

I'm a VP at a VC fund, and I look for revenue generating series B+ deals that can make use of $15M average check size. Here are my tips.

Other VCs: Other VCs are going to be your best source of deals. Build relationships with other VCs. Start by schmoozing at networking events, then invite them out for 1 on 1 coffees and talk about their strategy. Take notes so that you know what they're looking for. When you come across a deal that fits their criteria ask if they're interested in an intro - this will earn you some points. When you make an investment in a deal that fits their area of interest, offer to bring them in as co-investors - this will earn you a lot of points. Once you have enough points with a VC you can start asking for favors - these will basically be reciprocal to what you have done to this point:

• Ask to be brought into deals that they are leading. This is high quality dealflow that has passed another VCs DD, and having that VC as a co-investor means you have a partner for future financing. Remember that 1st time lead > follow on, and remember to ask if they are exercising their full pro-rata, or ideally increasing their ownership - the opposite would be a flag.
• Ask if there is anything they have seen that fits your strategy.
• Ask for intros to their portfolio companies who are not currently raising - talk to them, convince them you might be able to work together one day and ask those portfolio companies for intros to their VCs & board members. Alternatively, ask the VC for intros to their co-investors directly.

Accelerators & incubators: Volunteer office hours and mentorship to build relationship with both the management and the cohorts. These will give you inside knowledge on who’s a stars and who’s a spud. Hustle now so that come demo-day the entrepreneurs remember that you helped them, and believed in them way back when. They're getting into a 5-10 year relationship with you, they want to work with people who they like and whose opinions they respect - start building that rapport before all the other VCs give them term sheets. Other VCs will sometimes try to box you out of a deal – either because they want to own the whole round or because they want to use the remainder of the round as a social currency with their VC friends as specified above – sometimes you’re going to need the entrepreneur to fight for you to be in there. This also reinforces the point about building cred with other VCs.

Competition/comps slides: Every good pitch deck should have one slide on competition, and another slide on comps. A good competition slide should include competitive startups (not just F100 companies), and a good comps slide should show similar startups receiving funding and relevant exits. If they don’t have these slides, ask for them – because you don’t want to fund a company that hasn’t done some of this basic research – but happily, all of this is also dealflow information. If you love the space but you hate the team, check out the competition. Some people think this is dirty, but the notion that you should be loyal to a startup which you haven’t yet funded because they came to you first is ridiculous. If there are multiple horses in the race, you’d be negligent not to do your DD before deciding which one to back.

Conferences: It’s easy to come out of conferences thinking ‘that was fun, but was that worth the thousand dollar ticket?’. To maximize value you need to prioritize. I’ve learned the hard way to ditch the celebrity headline sessions, and the free rides in autonomous cars and to focus almost entirely on talking to startups, and investors – this is counter intuitive because this is what your day-to-day looks like and it’s tempting to do something different – but don’t forget that you structured your day-to-day like this because this is what works. Conferences like TechCrunch, CES and Web Summit have huge startup pavilions. You could spend the whole event meetings startups and not see half of them. Look at the lineup before the event, shortlist the startups you want to talk to based on your fund's strategy and try to get an understanding for where they will be. This is particularly important at events like CES where you might end up wasting time moving from hall to hall if you haven't done some prep (both WiFi and reception are so bad that it’s hard to do prep on the day, not to mention a waste of conference time). Investors often have color coded badges at these things, make a point of talking to anyone with a badge but be efficient - a lot of these investors are managing microfunds which might not be relevant for you. Ask about their AUM and industry early and politely end the conversation if you don't think you can be helpful to each other. When you find an investor who you want to follow up with, take a minute after the conversation to write a few notes from your conversation on the back of their business card. If you're anything like me you won't actually follow up with them unless you do it that night, so take 10-15 mins before going to bed to fire out a template email with slight adjustments for the notes you took for each investor. For next level awesome, use Boomerang to schedule the email to go out 2 days after the conference, otherwise your email might get drowned by the volume of everyone playing the same game as you. A slight delay can mean your email is burying the competition, not the other way around. Bring 3 times as many business cards as you think you'll need.

Build a brand: Reach out and offer to judge pitch competitions, sit on panels during conferences and offer to guest lecture at business schools - you won't be doing this at HBS but just go down the list until you find an event/school that will take you - then leverage that to pitch others higher on the list. Entrepreneurs and other VCs attend these things. Everyone wants to talk to the guy who was just on the stage - provided you had something intelligent to say. Most people who say they'll follow up with you won't, so make a note to follow up with the people you actually want to follow up with. If you want to start a blog/vlog/podcast just know that these things are huge time-sinks and are often not effective at building your brand - They are however very effective at distilling your thoughts on various topics and will make you a better speaker.

Industry landscape maps/industry reports: Just as you will be establishing your brand, various players in the ecosystem will be trying to do the same by publish infographics or lists of all the startups in their space, often divided by subsector. Some of these like KPMGs top X FinTech startups, or the AgFunder report are very organized and you can subscribe to their publication. Others will be posted on VC blogs by newly minted associates trying to make a splash – when I was an associate we had a WhatsApp group where we shared all these things. If you’re not already in such a group, make one.

Intelligence reports: Paid intelligence reports like the ones Gartner produces deserve special mention because they are very expensive to buy, and illegal to share. They do give free tasters which in my experience are useful for other parts of your analysis but usually don’t mention specific startups by name. These often won’t make sense for generalist VCs, but for specialists it might be worth biting the bullet and paying out. They will provide a little value for sourcing, and a lot of value for the rest of what you do.

Awards: Keep tabs on who is winning awards like the Red Herring, or Gartner’s cool vendors. When startups pitch you, they will often paste any award they’ve won on the first slide of their deck. Whenever you see an award you don’t recognize do some digging and see who else has won that award.

Track startup funding: Sign up to a few newsletter (I like Term Sheet and Strictly VC) and take note whenever a company that fits your strat raises money. Most financing rounds are meant to last 1-2 years so you can set yourself a calendar reminder to contact the startup when you think they will be running out of money. That's the time to reach out to see if you can be part of the next round. If you've been playing this game for a long time you can also just look through your email history for the newsletter from 1-2 years ago. You can do something similar by looking through the SEC's Edgar database for D-forms from a year ago which many startups file when they raise capital. There are also subscription databases (like Pitchbook), and free crowdsourced databases like Crunchbase that keep track of funding and let you filter by date. Finally, a good google search for funding announcements in the media with a filter on the date of the results does wonders.

Scouts: In my experience most scouting services are kind of like VCs without checkbooks, and consequentially, less access. Many VCs I know just set up a scouting service of their own. I haven’t quite figured out a way to use scouts properly so if anyone has feel free to chime in. In some ecosystems I’ve seen free scouting offered by NGOs that are actually pretty good – though I have never really taken advantage of this myself, these are probably good people to know. If they’re not competing with you for fees you can just take them out to coffee and ask them “what are you seeing in this space”. Many scouts are trying to jump into VC anyway and would love an opportunity to impress you. The other thing I’ve seen VCs do (again, not mine) is set up scouting affiliate programs – I think these basically trade free dealflow for a line on the affiliate’s resume.

Vendors: Your portfolio companies use vendors, which are likely also used by other VC backed startups. Attorneys who traffic in patent, cap tables, company registration and accountants are good examples. Ask them for intros to their other startup clients – it makes them look good that they can intro investors. Also ask them for intros to other VCs who they work with.

That’s it from me. Would love to hear how everyone else is building a sourcing pipeline.