Over the course of a year, a mid-sized VC firm might source and screen 1,000 potential investments, typically engaging with an average of 101 opportunities across a team before closing one deal.
With that many opportunities to vet before finding the right deals, having a deep understanding of sourcing metrics is essential to make sure your team is spending their time in the right places. Affinity Analytics can help teams analyze deal pipeline traffic, giving your team the opportunity to reflect on and improve your deal sourcing methods and processes.
By visualizing and delving deeper into your team’s sourcing data, you can start identifying which lead sources produce your best deal opportunities and catch early on if you're straying from your team's KPIs.
From there, you can clearly see if you’re sourcing enough companies to stay competitive in your field and ensure you’re focusing your time on the right deals at different stages in your funnel. Including screening out traffic at the top of your funnel and not wasting time in later stages. But if your screening process leads to fewer leads and eventually fewer deals, how do you maintain both quality and quantity?
Establish & measure against clear deal sourcing goals
In order to keep your team’s momentum while focusing on higher-quality deals you have to establish clear sourcing goals. Most teams have an idea of the sheer volume they need to source to stay competitive, often with focus points based on their firm's thesis but have a harder time knowing how they are measuring up. Affinity Analytics can help teams measure whether or not they’re sourcing enough by:
- Overall volume
- Founder demographics
KPIs will vary wildly from firm to firm, but setting clear expectations, tracking data consistently, and using Affinity Analytics dashboards to easily communicate progress can align teams' focus towards shared goals.
With goals and progress clearly visible, the team can spend time cultivating relationships with your most important sources while driving your overall sourcing strategy. With goals and progress tracking in place you can shift your focus to identifying and making improvements to sourcing workflows.
Improve operational inefficiencies
Measuring both the quantity and quality of deals can help to identify and address operational inefficiencies and further hone your ability to screen for the best opportunities. We recommend starting by having a clear understanding of your deals by source, monthly volume breakdown, and where your deals are stopping in your funnel.
Looking at your deals by source can help you understand where your deals are coming from and which sources are providing the most value, signaling where you should double down and focus your efforts.
Breaking down your pipeline in a month-to-month view can help you understand patterns in traffic and identify source gaps, signaling when there could be an issue early on to help drive consistency towards meeting your overall volume goals.
You can also reflect on a deal’s last status before it was lost to understand where deals are falling off and closely examine why. Answering the “why” can help your team identify if you're doing a good job filtering out noise early on and ensure you aren’t wasting resources further down the funnel by conducting due diligence on companies that aren’t a good fit for your firm.
Review individual team member performance
You can take your operational analyses further by narrowing in on team performance. Filtering deals by owner will show where your most important deals lie, how individuals are bringing in deals, and the average time to close for deals managed by each person.
This can also tie individual contributions directly to your team’s KPIs. If one team member is the source of your best deals, you can narrow in, identify best practices, and share them across the team.
When you’re processing hundreds of opportunities simultaneously across team members, it’s important to understand where your highest quality deals are coming from and where you should be focusing your time.
Diving into the details of your deal sources while identifying sourcing improvement opportunities early on can help create a more consistent and more successful deal pipeline. In turn, your team will be better equipped to find and close more quality deals.