You’ve probably read dozens of articles about how to raise capital from venture capitalists. However, as a VC, we have the opposite problem: how do we find companies in which to invest?
It might appear that origination is becoming much easier because of new tools like AngelList and the SEC moving toward adoption of rules that will allow equity based crowdfunding. Just do a search online and the VC’s job is done! But in practice, these phenomena create a tremendous volume of startups, which investors then have to filter. The easier it is to source, the more you have to work to screen.
Most investors rely on their network of colleagues and service providers to source investments. Unfortunately, our research finds this traditional approach is not powerful enough to uncover all of the most promising investment opportunities.