How Angels Find the Best Deal-Flow
Updated: Jun 12, 2019
Sourcing great deal-flow depends on staying connected.
Across the country entrepreneurs numbering in the hundreds of thousands are starting and/or growing their new businesses. Sometimes out of their garage, a school lab, or even their car as they endeavor to succeed and get the next client or tester/validator of their idea.
With so many deals to review it is often hard to find the proverbial needle in a haystack and even well-funded deals fail at a rate of 75%. For an angel or accredited investor this can be a daunting task.
The best way is to engage an angel network in your state, which is then connected to a nationwide network of accredited investors, and to make those deals tradable themselves after the one-year holding period required by Regulation D, 506c SEC.
1. Join angel networks in your state
If you live in a state outside of Silicon Valley, Silicon Alley, Austin, Denver or Seattle the thought may be that you won’t see the best deals. That is certainly not the case. In fact, by investing in companies locally through a local angel network you are more likely to meet other investors and this can lead to deal discovery. This also allows you to attend angel events that don’t require booking an airplane, hotel and ground transportation.
2. Get to know successful angels
The most active angels in your state already have a system for finding deals and those who are successful are almost always willing to share their methods of successful investment. By meeting them at local events, conferences and meet-ups you can pick their brain and perhaps even join in on their deals.
3. Focus on the things you already know
Often people wade into a space they find interesting but don’t know much about. This can be dangerous territoty. It’s better to stick with what you know. If you are a realtor then focus on real estate startups. If you’re a doctor perhaps medical devices or new pharmaceutical companies would make more sense. By sticking to what you already know and attending events in a space that you’re already an expert you have a better chance of figuring out which deals really have the best chance at success.
4. Meet founders and their teams
When a company is just getting started their founders are typically very easy to find and likely to sit down for a coffee or show you around their shop. They are excited to find accredited investors who are taking interest in their business and will usually welcome curious minds and good questions. Another great thing about meeting a local startup face-to-face is that perhaps nothing matters more than a company’s ability to execute on a business plan. When you get a chance to meet the team in person you have a better ability to gauge their potential for reaching their goals.
At angeltrades.com we are rapidly building a networking hub of angel investors nationwide, which will help you to find local investors and to find investible opportunities. I (John Gotts) have been building companies for more than forty-five years and know that there is life outside Silicon Valley. In fact, we hope to disrupt the old guard by empowering accredited investors nationwide. We also believe that accreditation is something that should be based on education rather than earnings and are working with state reps & senators across the country towards those goals.
Visit AngelTrades.com to learn more.
John Gotts, AngelTrades
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