A few of our smart VC clients found a new way to share and source deal flow using Collections. Here's what they're doing.
Since we launched Collections, our market landscape building and collaboration platform, we’ve seen folks use it in ways we’d not envisioned. First, we unexpectedly saw folks using it as an internal deal flow tracking tool.
More recently, we saw a number of VC clients using it as a way to share deal flow with one another.
So we talked to them to understand why they are doing it this way and how exactly they do it. Here’s what we learned.
The process for sharing deal flow has been pretty broken.
We first dug into how they have shared deal flow historically and what we learned from them was that the process was suboptimal.
“My inbox is where deals go to die.”
One recurring theme we heard was that sharing deal flow over email doesn’t work. Emails are too easy to ignore or forget about, and it’s especially difficult to track these deals – both as the sender and recipient. And while all the VCs acknowledged they live in their inbox, it was not a great place for sharing/receiving deal flow.
“Meeting up in person is usually great, but I don’t have enough time.”
Another way VCs said they share deal flow is by meeting in-person. This is great as it’s personal and lots of details and nuance related to deals can be shared quickly.
The challenge, however, with in-person meetings per the VCs we talked to is that it’s time consuming and impossible to do with your entire network.
Our investors pointed out that it also doesn’t work when you’re in different geographies. And like email, it’s a one-time event. There is no great method of tracking deals shared in-person either to see how they progress or what happened.
In other words, the feedback loop, like email, didn’t really exist.
“Sharing an Excel doc feels transactional.”
We then asked VCs why don’t they just share a Google Doc or Excel list, the response was generally disgust with the idea.
Excel didn’t come into the mix mostly because most VCs felt that it made deal flow sharing too “transactional”. Basically, sharing deal flow with someone needs to feel a bit more ‘special’. Sending a spreadsheet which could go to 20 other investors immediately loses that per the VCs we talked to.
A couple of enterprising VCs we talked to had tried this but quickly ran into a few issues:
They didn’t know if the person they sent it to looked at it
Collaboration in multiple spreadsheets became unwieldy as spreadsheets are not good for collaboration
Keeping track of multiple spreadsheets was a pain
Considering how imperfect the existing options are, it makes sense that VCs are looking for a better way.
And then we discovered them using Collections as a hack.
An early stage investor shares Collections to share deal flow.
To illustrate the hack, we’ll use an anonymized client example. In this case, we have Beth from AwesomeVC, a seed-stage VC firm, getting/sharing deal flow with Michael from Great Ventures, a Series A and B stage-focused firm.
Beth initially created a collection called “Awesome-Great deals”, which includes her current portfolio companies as well as companies that aren’t the right stage for her to make an investment but that she wants to track. For example, she recently met the founders of a Series A Blockchain company, so she added them to collection.
She decides to share the “Awesome-Great deals” Collection with Michael. It’s important to note here that Michael doesn’t need to be a paying customer of CB Insights to see this Collection.
Beth is sharing the deal flow Collection for two primary reasons:
- She wants him to see her portfolio companies that might be a fit with Michael’s investment criteria and which may be coming up on raising their Series A rounds
- She can share deals with Michael that are too late for her fund that she comes across but might still be a fit for him. These are not her portfolio companies.
Before sending the invitation to him, Beth said that she made a few tweaks to make the collection more personal – for example, she tagged the companies most relevant to Michael based on their current investment stage so that he would be sure to see them right away upon opening the collection.
Then she dropped him an invitation with a quick note of introduction.
Once Michael had the link, he was able to view the list of relevant companies and leave questions right in the collection about the companies that looked intriguing. Beth received email notifications about each of his comments and was able to easily respond to them in Collections.
And about a week after she shared the Awesome-Great deals collection, Michael added a new portfolio company PortCo1, for Beth to check out.
Now Beth and Michael both continue to update the collection as they hear about deals from time-to-time that they believe could be of interest and want to share with each other (even if neither is a portfolio company)
She says this process feels collaborative but in a more sustained and natural way than a one-off meeting.
The Collections method: clone, share, repeat.
We had to agree that the process Beth described seemed like a smarter way of sharing deal flow than any other method we’d heard about.
But it was what she told us next that was really smart as it allowed Beth to scale her deal flow sharing capabilities with Collections.
Beth is connected to many other Fintech investors who could be follow-on investors for her seed stage companies, and she realized that many of them would be interested in the same Awesome-Great deals collection that she’d shared with Michael. So Beth didn’t stop after sharing the collection once.
Now, every time she wants to share the Awesome-Great deals collection with a new investor, she just clones (makes a private copy) of it and quickly changes the collection’s name and description.
Each time, this creates a new, personalized channel for sharing deal flow with other investors.
In doing so, she is both making sure to connect her portfolio companies with relevant late-stage investors, while also painlessly creating open lines of communication for other VCs to send deals her way.
We’d like to hear if this approach works for you too, so try Collections now and let us know what you think. Also, if you found another interesting hack with Collections, drop us a line.
You can create a free account on CB Insights below.