Most venture capital firms typically employ a “deal funnel” that more or less looks as follows (see image below).
Basically, VCs are trying to maximise the number of potential investment opportunities to select from. They do this by contacting and meeting as many firms as possible, and during their weekly committee meeting filter out the top few opportunities deemed worth spending more time on. Hundreds of opportunities are reviewed by the junior team using an internal CRM. This is a completely rational approach for each individual investment firm. However, it has some significant drawbacks for the VC investment environment on the whole.
VC partners end up spending the majority of their time uncovering very basic information of companies they never would nor could invest in (due to size, growth, or other reasons). Founders are approached from all sides by investors who, as they later find out, are not a good fit. It is an ad hoc and opportunistic approach. Hence the timing of being approached by investors does usually not coincide with the time when the company actuallly needs funding or when its founders are seeking an exit.
Is there a more efficient way? At Dealroom we aim to shorten the funnel, by automating some of the time wasting activities. We aggregate basic information, and let founders update their own company profiles, so that the right investors can find them at the right moment. Automated tracking of companies and deals means that VCs do not miss opportunities, without wasting precious time of founders. In essence, Dealroom thus covers and automates the top part of the VC business development funnel, saving time for all parties involved.
Yoram Wijngaarde, Founder
The Dealroom Team