Largely, my thoughts around sourcing come from my time in Growth Equity at Battery Ventures (one of the early indoctrinators of the sourcing workflow along with TA Associates and Summit Partners) and from helping build SourceScrub (which if you don’t have yet and are starting to build a sourcing function, you definitely need).
One thing you have to understand about sourcing is that it’s majorly sales funnel driven.
The more you start with at the top, the more will generally filter through your funnel and hopefully end up at the bottom.
Now if you have a team of just a few people, how do you start filling the top?
A couple different steps here when it comes to navigating sourcing and landscaping for growth equity firms:
- Industry Conferences: If you’re looking to get smart within a space and know all the players within that space, you HAVE to be attending conferences to meet with these companies, attend panels, learn about the verticals/sub-verticals, listen to speakers, meet with competing companies, be known as a player who’s interested in working and investing in said space.
- City Trips: If your targets are a bit more bespoke (or perhaps too big to send their CEO’s to these conferences) then you have to get out to meet them — dinner, coffee, drinks, whatever it takes to get to know your CEO’s and targets and figure out from them who their competition is (you can learn about names online but the real inside scoop only happens through conversation).
- Banker-driven Deal flow: Bankers (at least the good ones) will most likely be active at these conferences as well — not to mention these days bankers are also sourcing looking for targets to pursue mandates with. Once you get to know the bankers, there are some smaller shops who you can get away with paying a smaller fee to — building relationships here not only will help you get in-front of more deal-flow more often but will help you build your knowledge within the space.
One thing to be cognizant of is that many teams and firms will tend to get internally competitive looking for businesses, playing the game of “how many calls did you make this week,” “how many meaningful interactions did you have?” — the reality is that the world is large enough for tons of interesting companies to be out there and big enough for your team to take a structured, organized approach when it comes to landscaping various verticals.
Work with your team to make sure all vertical and sub-verticals within your areas of interest are being covered (rather than having a free-for-all ‘call anyone’ mentality).
Lastly — tying this all together, if you’re looking for BD talent that has been trained to SOURCE and knows the ins-and-outs of PE/Growth BD, come to OfficeHours — we have a dedicated BD Sourcing Curriculum that we train our Mentees on so your new employees can hit the ground running from Day 1!
image source: https://slate.com/culture/2013/11/wheres-waldo-a-new-strategy-for-locating-the-missing-man-in-martin-hanfords-beloved-series.html
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