Mastering Startup Sourcing: 4 Strategies to Amplify Your Dealflow
Startup sourcing is a multifaceted process that involves systematically identifying, evaluating, and procuring startups for various strategic projects, including investment, acquisition, or partnership. This consists of scouting and selecting early-stage companies that align with specific objectives, industry trends, or investment criteria.
To innovate and grow, corporate venture capital companies, accelerators, and other entities engaged in innovation and growth are used to undertake startup sourcing activities. These efforts cover a spectrum of tactics, from attending startup pitch events and networking with entrepreneurs and industry insiders to using digital tools, databases, and platforms to identify emerging startups within targeted sectors or markets.
The main goal of startup sourcing is to discover and connect with startups providing substantial strategic value. This value can arise from groundbreaking products, disruptive technologies, or services that are in demand or have the potential to be.
By effectively sourcing and engaging with startups, organizations can find some benefits, such as, for example, access to new ideas, markets, technologies, and talent that can catalyze their growth, enhance their competitiveness, and fuel their innovation strategies in dynamic and rapidly evolving industries. Startups can also use corporate resources to grow and gain visibility in their operating sector.
Startup sourcing is critical to organizational innovation and strategic development, enabling companies to adapt, evolve, and thrive in an increasingly competitive and disruptive business landscape.
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4 strategies for cultivating a network that facilitates startup sourcing
Engaging with institutional investors
Establishing connections with institutional venture capital firms stands out as a pivotal strategy for reinforcing your pipeline of investment opportunities. These firms, renowned for their ample dealflows, consistently come across numerous promising startups. Accessing this reservoir of relevant startups is an invaluable asset for any corporate venture arm.
Corporate venture capitalists (CVCs) can offer reciprocal value to institutional venture capital firms by furnishing two essential resources:
- Firstly, they can serve as domain experts in specific fields, providing due diligence support.
- Secondly, CVCs can emerge as strategic partners for future portfolio companies, leveraging their access to industry executive networks and offering lucrative commercial partnerships to startups.
Leveraging conferences
A pivotal aspect of expanding dealflow involves positioning oneself within the nexus of startup activity. Attending technology and innovation conferences is a primary avenue for achieving this goal.
Events like South by Southwest (SXSW), CES, and industry-specific gatherings such as Insurtech Connect (ITC) offer access to many startups actively seeking funding opportunities. These conferences facilitate direct interactions with startups and enable CVCs to cultivate expansive networks, further augmenting their dealflow potential. Additionally, specialized conferences like the Global Corporate Venturing & Innovation (GCVI) Summit cater specifically to CVCs, providing knowledge exchange and networking platforms among industry leaders.
Harnessing accelerators for startup sourcing
Accelerators present another avenue for accessing startups and enhancing dealflow volume and quality. Like institutional venture capital firms, accelerators conduct internal vetting processes, ensuring that the startups they endorse are of commendable quality.
Internal accelerators offer a proprietary channel for accessing strategically aligned startups. In contrast, partnerships with external accelerators like Plug and Play provide access to a diverse range of startups, including those tailored to specific industries.
Internal exploration
CVCs can also augment their dealflow by exploring opportunities within their organization. Collaborating with innovation and sourcing teams provides access to internal pipelines of startups, while internal R&D initiatives and intrapreneurship programs foster organic growth within the company.
Enhanced interaction with business units proves particularly potent in expanding dealflow. Business units can serve as conduits for identifying promising startups and offer valuable insights and support in engaging with startups that align with their strategic objectives.
In summary, diversifying and amplifying startup sourcing strategies is imperative for a successful CVC, as robust dealflow is integral to investment success. By harnessing a multifaceted approach encompassing institutional relationships, event participation, accelerator partnerships, research, and internal collaboration, CVCs can effectively enhance their investability and seize promising investment opportunities.
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