Capitalizing on quality deal flow—whether you're sourcing more deals or managing deals faster—is an investor’s greatest competitive advantage. When it comes to maximizing quality deal flow though, the quality of your brand and reputation are crucial. Here are a few ways to build and lean on your brand to differentiate yourself from the masses as more VC firms crop up to cash in on new investment opportunities.Build a clear brand reputation
Building a strong brand reputation is a key way to increase the quality of deals that come your way. Differentiation from your competitors starts with your reputation. It’s important to remember that, oftentimes, founders are interviewing you just as critically as you are interviewing them.
According to a research study on the role of brand in venture capital by DeSantis Breindel, 88% of CEOs believe that a strong brand helps venture capitalists attract entrepreneurs. Tzvete Doncheva, an investor relations and platform manager at UK-based PropTech1 Ventures, describes the importance of brand:
“Money flows like water to top-tier founders. Brand—only when backed up with a great proposition—is a way for VCs to cut through and win top-tier founders. A strong brand is what can take you from being known to liked to perhaps even loved.”
Steve O’Hear at TechCrunch describes the influencer effect that a strong brand can drive in the venture arena: “VCs need to market themselves to ensure they see all the best deal flow and can get in on the best startups...portfolio companies/founders say how much a VC helped them...and future founders think, ‘I want said VC on my next cap table.’ ”
Building a brand doesn't happen overnight, but as your reputation grows, let's take a look at two key ways to leverage it to improve deal flow.
Be an expert in your industries of focus
Today, funding for startups is readily available and offered by more diverse sources than ever before. This means that staying relevant in the market is more valuable. In addition to networking, you should consider leveraging blogs, podcasts, and social media to demonstrate your expertise.
The same study by DeSantis Breindel found that approximately 60% of CEOs feel that the reputation of individual partners is the most important driver of a venture capital firm’s brand image. Showcasing your expertise through a well-positioned online presence will drive quality lead generation and help you establish yourself as a trusted resource to founders, investors, and other potential partners.
To attract—and potentially partner with—high-potential and driven entrepreneurs, investors need to offer more than just capital. VC Analyst at Cass Entrepreneurship Fund, Akash Bajwa, suggests teams build trust and demonstrate your expertise through blog posts, conferences, office hours, or other channels to “incrementally fortify” your brand.
Build proprietary deal flow
Creating a powerful network effect offers limitless opportunities for a diligent VC. J. Skyler (Sky) Fernandes, founder and general partner of VU Venture Partners, has outlined ten characteristics that make a truly great venture capital investor.
In Fernandes’ experience, being able to source proprietary deal flow through your network is arguable the number one differentiator among top venture capitalists—it’s what keeps already successful venture capitalists at the top. Even when a venture capitalist at a top firm is less effective than another investor at an average-performing firm, they are likely to outperform because of their access to top quality and quantity proprietary deal flow.
Gil Dibner, general partner and founder at Angular Ventures, describes this power of proprietary deal flow. Sometimes, investors are able to hunt down a company, create a relationship, and generate an investment opportunity that doesn’t exist for other investors. Sometimes, entrepreneurs seek out specific investors—who they have worked with or heard about—to discuss a business idea, consider investment, or just explore financing options. That sort of inbound vote of confidence means a lot—and can result in truly proprietary deal flow.
Jason Calacanis, an entrepreneur, angel investor, and author, describes how he focuses on proprietary deal flow: “Angels: the name of the game is proprietary deal flow. You earn this by your track record and by making yourself available. That’s why my Twitter name is my email and why I never underestimate anyone." Visibility and accessibility can make the difference between an open network full of opportunities and an empty deal pipeline.
The next time you have a strategic review of the health of your deal flow processes (which you can do with a single click with your Affinity Analytics dashboard), make sure to include a conversation about your team's brand and set brand-building KPIs if you haven't already. You never know where your next deal might come from as your reputation grows.