How To Get More Deal Flow From Founders You Invest In
You got on the cap table — congrats! Getting on the cap table of a competitive startup is no small feat. But, to be a successful angel investor, you will need to invest in more great startups. One of the best ways to find other great startups is through the founders you’ve already invested in. Founders are a great source for deal flow because they often meet other founders and develop a good sense of founders that are going to be successful.
However, most investors blow their chance of receiving deal flow from founders that they invest in by making basic mistakes. There are many ways to lose out on deal flow: by not asking founders you’ve invested in if they’ve come across interesting companies, by not being a value-add investor that founders want to send deals to, or by being a high-maintenance investor that founders don’t want to refer their friends to. Below is a list of tips to be a value-add investor that founders will want to send deals to.
1. Do things quickly & correctly
Let’s start with the basics! Whenever the founder asks for documents to be signed, funds to be wired, steps to be completed, etc. try to be the first to complete the task. Founders have an endless to-do list on their plate and the last thing they want to be doing is following up with investors who can’t complete basic administrative tasks on time.
If you can be “brilliant at the basics” you’ll already put yourself ahead of other investors on the cap table. Notably, this doesn’t require a network, money, time, industry expertise, or anything special, so if you’re just getting started investing, this is a great way place to start.
2. Don’t be “that guy”
This point is related to the first, but equally important. Every founder has “that” investor or two that is frequently making special requests, needing an extension, has obscure legal questions, asking for special treatment, decreasing their commitment at the last minute, etc. Although these requests are often “reasonable” they quickly add up. If you fall in this boat, founders will not refer deal flow as they wouldn’t want that to come…