VCs: Deal Sourcing in the COVID-19 Era

Deal sourcing has become a hot topic this year in the throws of COVID-19. Have VCs and PE firms stopped looking for deals? Are they more focused on investing in their current portfolios? Have they stopped activity all together? There hasn’t been a hard and fast rule, but here’s what we know: VCs have and are continuing to raise record funds.

There’s no question that we will continue to see economic fallout from the pandemic, with some arguing that the worst may be yet to come. Due to both consumer and business mindsets drastically shifting, COVID has changed how we behave and react to products that are sold in the market today. As consumers, we question “do we really need this?” and as businesses, we ask “will my customers/clients use this?” It’s hard to predict the technologies and innovation that will make it and those that won’t.

But what are VCs looking for right now and how do they continue to optimize investment activity today and moving forward into the near future?

1. Diversifying. Diversity has become a major issue, bigger than before. To understand consumer and business behaviors, it’s crucial to diversify today’s investments – which industries are flourishing in the face of a pandemic and which ones are struggling. Diversification is key to a well-rounded portfolio.
2. Relationship-building. This is not new for VCs and PE firms, but it’s more important than ever. VCs need to look beyond Zoom and blind pitches for due diligence and sourcing. But how do they do that when everyone, strangers and contacts alike, are sitting behind computer screens? How do they find those innovative companies of the new way post-COVID? They find where those deals are through relationships. Building and maintaining relationships with executives and keeping the executive search pipeline full to target people in their funding pipeline category. These relationships will give entry way into innovation and inclusion.
3. So how do we effectively do this? The sourcing? Diversifying? Relationship-building? It’s all in the analytics. To properly do this and optimize it, we need the proper sourcing analytics around it. There needs to be thorough analyses of behaviors and industries to give investors a better idea of what will potentially fly or fail in a post-COVID world and who the right executives and companies will be to target. An analyses of WHO those people are to add into our networks and how to approach them. The analytics will help us target people that are innovating in our respective fields – building relationships with those people and deal sourcing from there.

Call to VCs:

If you’re a VC, the 3-step approach outlined above is what will help you source for the deals you need and find innovative technologies and people in this new world. Hire Sage Talent and our analytics to build the pipeline of people to build relationships with, as well as the innovative technologies you want to be a part of. We will build your referral networks for you to get you in touch with the people who are going to be building the products that you want to target. Let’s not only make the best of this situation, but flourish in the face of it.