Proprietary Deal Flow is Dying

The Next VC land grab is evaluating investment opportunities at scale

For decades, Venture Capital Funds have been pitching “proprietary deal flow” as one of the top reasons LPs should invest in their funds. Their networks — scouts, entrepreneurs, investors, venture partners, and employees — could not be replicating by anyone. And this was important because deal flow is tied to performance as VCs invest in <1% of deals they see. The more deals, and higher quality deals, VCs see should translate into higher performance.

But now, the concept of proprietary deal flow is dying at the vine and the next big VC gold rush will be evaluating and making investment decisions at scale.

Before we get into the future of VC, let’s look at just a few reasons why proprietary deal flow is dying:

1) Covid forced remote investing

Prior to Covid, most VC money was raised and deployed in the fund’s backyard. Startups would race to Sand Hill Road and meet with prospective investors in person, hoping to land that seed check that would take them to the next level.

As lockdowns swept across the country, startups (and investors) were forced to take meetings remotely. Not only that, but startup founders and employees spread across the country to their ideal location. As people spread and meetings went virtual, VC dollars started to be…