A guide to sourcing deals and investment opportunities

June 7, 2021
Whether you work for a venture capital firm, private equity group or are looking for your next M&A deal, our guide to deal sourcing has you covered. We’ll detail our best practices for finding more promising investment and acquisition opportunities.

Why it’s important to incorporate data into your traditional deal origination methods

Dry powder levels are at an all-time high. The number of active firms in the private markets are rising and new deals are harder to come by. As the capital markets continue to become more crowded and competitive, investors need to find new ways to streamline how they source deals.

This increasing competition is leading many firms to look beyond the traditional, network-driven means of deal sourcing towards a more data-driven approach. That’s because timely, accurate financial data helps substantiate claims, focus research and drive efficiency.

Our guide looks at how you can use market data to inform your investment strategy, find companies in your target sector that are primed for funding or acquisition and accurately gauge a company’s growth.

What our deal sourcing guide covers:

How to build and inform your investment strategy with private market intelligence, by:

  • Conducting detailed market analysis
  • Identifying macro trends
  • Researching exit activity of sponsor-backed companies
  • Comparing specific companies
  • Discovering and tracking emerging spaces

How to identify investment targets that align with your strategy, by:

  • Creating a target list
  • Searching for companies that are ready for funding or acquisition
  • Connecting with your targets

More about the PitchBook deal sourcing guide:

Why trust what we have to say?
We’ve been tracking the private markets for a decade and we currently have investment data on more than 3 million private companies. We offer up-to-date and accurate data on their pre- and post-money valuations, industry, total capital raised, revenue figures and other non-financial metrics that help you quickly build a list of promising opportunities and maintain your investment pipeline.

Layered on top of our dataset is an advanced search tool that allows users to search and filter companies in order to find investment options that fit their strategy. We designed it so deal origination would be easier for investment professionals across the board. In fact, many of our clients have found success by proactively sourcing investments with PitchBook.

Why should market analysis help inform a future investment?
Insight into market trends is key to making a good investment decision. Private market intelligence is the best way to understand which sectors are growing and how much capital is being infused into the market. Knowing where companies sit in the broader market context is also helpful when allocating capital. With a summary of the landscape, you are better enabled to track trends at a glance, anticipate shifts and even see where your competition is moving.

How can I understand a newer market that has less research available?
New trends within the VC landscape pop up all the time, and identifying those spaces in their nascency—before competitors key in—can be a challenge. Our guide goes into more detail, but we recommend diving into PitchBook’s Emerging Spaces. We are tracking more than 125 spaces that are on the rise, but are not yet established enough to be considered verticals in the market. For example, clean meat, carbon capture, air taxis, nanomedicine and medical robots are emerging spaces that we cover. Discovering niche corners of the markets and potential investment opportunities should be easier and that’s exactly why we started tracking these areas.

Will the guide help me create a list of potential investment opportunities?
Yes. Learning how to create a target list is a large portion of our guide. We’ll help you quickly create a list of promising investment or acquisition targets based on the attributes that matter most to you or your client—including industry, location, pre- and post-money valuations, total capital raised, revenue figures and more. This could include identifying all the mobility tech companies in California with Series B funding, for example, or listing all the PE-backed fintech companies in Europe that are nearing the end of their holding period.

How can I tell if a company is in need of funding?
Our guide will go into detail on searching for companies that are ready for funding or acquisition. There are several key figures such as the last funding date, employee count and more that we look to as early signals that a company is likely to need an infusion of capital or debt. For acquisitions, you can leverage insight into VC or PE portfolios to see when companies are nearing the end of their holding period.

How do I figure out who to reach out to about an investment?
Once you’ve established your list of promising investment options, the best next step is reaching out to each organization as quickly as possible. Our company profiles include management teams and executives because nobody likes to waste their time reaching out to the wrong person. Plus, competing firms may be eyeing the same investment, so getting an edge on contact information may be the advantage that you need.

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