In ENT 640 (my 5th graduate course out of 10…wooohooo!), we’ll be discussing Winning Angels by David Amis and Howard Stevenson. The first chapter of the book examines sourcing which technically is a fancy way of saying how you should strategically establish and position yourself to obtain investment deals. This tactical planning will allow you (the investor) to best locate deals that will permit you to line your pockets while also building your business and financial expertise accordingly.

So, I’m sure you’ve heard the phrase, “play chess, not checkers” well, that’s totally what sourcing is all about!

     There are several ways to methodically place yourself in a prime position to “source” the best investments out there. By making valuable contacts with the right individuals within various influential arenas and subsequently building rapport with these financially savvy persons, the novice investor can effortlessly acquire information about future ventures that may be lucrative deals or merely learning experiences. Essentially, even if no money is made (I know…I know…who wants to do that?!?) the knowledge acquired grants entrepreneurs the ability to gain a tremendous amount of business acumen since they are able to see fundamentally how various rounds of financing will effect an organization. Furthermore, as discussed in Winning Angels, “future owners can gain valuable intel about what winners and losers do for future opportunities as both entrepreneurs and investors.”

     Sourcing for deals is much like hunting for a job. Early on in my career I had to learn that when looking for employment you have to be precise about what you want. I’m not sure if you believe in a higher power, but I remember praying for a job; and, essentially that’s exactly what I got! A pain in-the-you-know-what! I wasn’t specific about what I wanted and had to deal with headaches that were certainly avoidable. I have since learned that being specific about what you want and being able to communicate these principles facilitates in “weeding out” potentially disastrous predicaments. Sourcing for investment deals works in quite the same manner. When looking for a job, a candidate can utilize friends and family members, online databases, colleagues, previous co-workers and even chance encounters to learn about employment opportunities. Each will produce varying levels of prospects while additionally varying in quantity (i.e online databases); whereas others will yield quality results simply because of their propinquities with various organizations (i.e. colleagues) that may be looking to hire immediately. In any event, sourcing is just the same.

     By networking informally, joining investor groups, making friends with seasoned venture capitalists, and remaining open to chance encounters, future investors looking to analyze and explore the art of investing successfully will be able to find a sourcing strategy that best works for them and will yield a competitive advantage that will generate more deals and hopefully revenue as well.

 

References

     Amis, D., & Stevenson, H. H. (2001). Winning angels: the seven fundamentals of early-stage investing. London: Financial Times Prentice Hall.

20 thoughts on “Sourcing

  1. Amazing job on your summary on sourcing. I like the way you compare investing to looking for a job. You do have to know what you want to be able to get it. I also think that letting other people who are experts help you with your future investments. Networking is a key way to success whether you are looking for a job or investing. I look forward to being in another class together.
    Sincerely,
    Tina Jones

    • Thanks Tina! I always try to connect with something in the real world that makes sense to me and will hopefully make sense as well to my peers and professors. You are absolutely right, networking is key; and, while I used to think it was a shallow way of getting to know people, I am now realizing that it is an essential tool to reaching your goals in life!

  2. Tiffany,
    Congratulations on making it to the halfway mark of the program! You’re right, it is important to establish a strategy that allows the option to determine what options are available and which work best for a company. It is essentially similar to looking for employment and knowing what particular job to seek. As with employment, we know what job we want based on our education and experience and those are the jobs we look for and the same is true in the entrepreneurship world. Over time, networking provides endless opportunities to meeting new individuals who could be potential investors. Excellent post!

  3. Jake Martin says:

    Tiffany,
    Great post, you made it clear about how “sourcing” investment deals is a good skill to have if you want to be successful. After all, very few businesses get started these days without investment capital and knowing where to shop is of great value to entrepreneurs. I like how you compared shopping for investors like shopping for a job, if you don’t mesh well with an investor, it could cause problems down the line! Much like starting a job that you grow to regret because it’s not right for you!
    Jake

  4. Tiffany,
    Great review! You’ve covered some major points. As you noted, sourcing a venture is similar to job searching. As you’ve noted in your review, just like a job the partnership should be mutually beneficial. As such, it is imperative to be authentic and intentional in the search and vetting process. This requires Entrepreneurs to become familiar with investors and the reputation they’ve created for themselves. Similarly, investors need the confidence that they are backing a venture that won’t end up regretting down the road. As you mentioned, there are various ways to network and familiarize both the investor and entrepreneur with one another beforehand to help increase chances of a great partnership.
    Best,
    Shay

    • God knows I’ve had some jobs that were just that…a job! I was emotionally drained everyday and although I felt like I was making a difference, it was more problematic than it was beneficial to me. Now that I am more mature, I know exactly what I’m looking for and can better understand the parallels of an angel investor knowing what they want/expect from entrepreneurs needing the capital for their start-ups.

  5. Tripp Viverette says:

    Hi Tiffany,
    I totally agree with your post, and see the connection between looking for a job and sourcing. Like you mention, early in your career, you’re looking for the one thing that you know is really important – a job. As we gain experience, we learn that there’s more to it than that. I’ve learned that networking can help teach us things a little quicker than what we learn on our own (and by doing it the wrong way first).
    Tripp

  6. TK!

    You used great analogies in your reflection. Investing is very much so a game of chest! I didn’t even think of it like that. My reflection made a comparison of the chapter on Sourcing to the ABC show “Shark Tank”. The sharks are sourcing investors. I also appreciated your point about being specific. So important! I am a part of a hiring team in my current position, so I have interviewed A LOT of people. I am always leary of people who apply for our positions that say they are looking for anything because that doesn’t normally yield longevity. That’s okay for some jobs and some things in life, but not ones that you want to yield intentional results.

    Thanks, as always, for being insightful!
    Elaina

    • Hey girl!
      Yes, I too, used “Shark Tank” in one of my other posts because it is definitely relevant to what we’re discussing. As for your sourcing, you are right to be cautious of those individuals who are just looking for “something.” If they were indeed hired, they would just be working until they found something else that they enjoyed more or paid better. Thanks for stopping by!

  7. Hi Sis! What really resonated with me whats the quote “play chess not checkers.” It is something that I needed to be reminded of. I think it is really easy to forget about the long game, especially when you want to be successful RIGHT NOW. I have been falling prey lately to this “time sensitive” culture that says you should be to point a by age 24 or f by 26. Always rushing. Thank you for the gentle reminder to slow down, and play for the long game not the right now.

  8. Shannon Shepherd says:

    Tiffany,
    Great post! I love what you say about being specific. I believe whole-heartily that we have not because we ask not. when it comes to sourcing we must be able to express our needs specifically. I believe investors know exactly what they are looking for so being able to articulate the needs of our business is key to obtaining potential investors. I enjoyed reading your post.
    Best,
    Shannon

  9. Shannon Shepherd says:

    Tiffany,
    Great post! It is important to educate yourself on how investing and sourcing will affect the bottom line of your business. Know what you are giving up and what expectation you must meet to remain successful in your business endeavor and continue to build critical relationships with investors. I enjoyed reading your post.
    Best,
    Shannon

  10. Rebecca Wiggins says:

    “Play chess, not checkers. I really really really need to learn how to play chess. I taught myself once when I was little, and never really played. That will be a goal that I set for myself. I know that playing chess sharpens the mind, and can improve my sharpness on the business playing field.

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