Sourcing is the lifeblood of venture capital. The best funds don’t wait for deals—they build systems that attract them.
A strong sourcing strategy turns your thesis into a magnet for aligned founders and co-investors. It’s about intentionality, relationship-building, and constant refinement. This article shows how to design a sourcing engine that compounds over time.
Building Your Sourcing Engine
A deliberate, value-driven approach is the foundation of great dealflow.
- Focus on top-tier opportunities. These are rare, competitive, and founder-driven. They are not casting a wide net begging for cash—you hear about them through your network and behind closed doors. You win them by establishing credibility and showing the value you bring beyond capital.
- Add value and stay visible. Share expertise in your sectors—through founder support, events, or online communities—to grow your network and attract quality inbound opportunities.
- Evaluate your sourcing channels. Track which sources consistently deliver strong deals—co-investor referrals, accelerators, universities, angel groups, or industry events—and concentrate effort where the ROI is highest.
Example: A fintech investor builds relationships with accelerators and hosts founder workshops. Within six months, they’re introduced to five strong startups—two advance to diligence.
Foster Long-Term Relationships
The best sourcing systems are built on trust and reciprocity, not transactions.
- Engage responsibly. When a deal doesn’t fit your thesis, refer the founder to someone who might be a match. It strengthens your reputation as a constructive player.
- Add value freely. Offer tactical feedback, intros, or resources—even when you don’t invest. Founders remember helpful investors.
- Provide clear feedback. Be candid and respectful when passing; honesty builds goodwill.
- Think long-term. View every interaction as relationship capital that compounds over time.
- Track interactions. Use a CRM like Decile Hub to log conversations with founders, VCs, and connectors so valuable relationships don’t drift.
Example: At a demo day, a VC immediately puts all relevant leads into Decile Hub, their dealflow CRM. Even for deals they pass on, the VC follows up later—turning “not now” into “next time.”
Evaluate and Iterate Channels
Great sourcing is iterative. Measure, adjust, repeat.
- Assess channel quality. Track how many sourced deals progress to diligence or investment.
- Double down on what works. If referrals or conferences outperform cold outreach, shift resources accordingly.
- Experiment intelligently. Test new networks, online platforms, or scouting models—but always through your thesis lens.
- Leverage visibility. Use LinkedIn and X (formerly Twitter) to share insights and connect with thought leaders who expand your reach.
Example: One fund discovers 70% of quality deals come from referrals and 20% from conferences. They increase network outreach, pursue conferences only if there are speaking slots, and automate LinkedIn/e-mail filtering with AI tools.
The Bottom Line
Effective sourcing blends strategy, consistency, and reputation. When you align your sourcing engine with your thesis—and give more to the ecosystem than you take—you attract higher-quality, higher-conviction deals.
With a robust pipeline in place, your next task is filtering—screening opportunities efficiently to focus on those that truly fit your strategy.