Sourcing for Creators
This is basically an Analyst’s Guide to Creator Sourcing.
Read Staging for Managements & Funds first.
This isn’t going to be “What makes a good Creator investment?” because that’s completely dependent on what stage of Creator you’re looking for and most investors or talent management’s aren’t too sure yet.
Editors Note: I was trained in VC sourcing from someone who learned at Bessemer, so keep that in mind in terms of how bottoms-up heavy this might sound. That means, this is going to be aligned with traditional VC sourcing, but using content-oriented tools.
To start, let’s think about how different Creator Sourcing can be from traditional Founder Sourcing.
Why Sourcing Matters
Every Manager & Investor has a type of Creator they like. I go into detail on this in Staging. The definition of what that is differs by:
- Management and…
- Individual Managers working at the Management
For Investors, this is more commonly known. There are practices that can get everyone in better Alignment, but in general, expect for the Focus to be something that’s a living and moving target.
Sourcing is a ways to temp-test the alignment of your team for 1) misalignment or, hopefully, 2) opportunities you didn’t think about.
And vice versa. If you’re a Junior VC, specifically, it’s healthy to check exactly what kinds of Creators get your Senior excited. “Moving Target” motto still applies.
What’s different?
#1: This is an entirely new asset class.
Frankly, that’s why you’re looking at this blog to figure out exactly how this works. Even the highest up of VCs that work within this space know that the deal structure is fresh & living. Meaning that the terms, definitions, and best practices are just starting to solidify.
With that being said, in sourcing for Creators, it isn’t just finding “the right Creators,” but also creators that are willing to hear out the idea of investment to start. If you’re an investor, you’re more likely to the social situation to which founders know about venture and are more excited about the idea of investment.
Meaning half of your attempts in sourcing will have a response looking like this:
#2: They work with who they know.
Financing included. Management included. If we take the more common route of fundraising for subsidiary companies, Creators and Celebrities are famous for skipping Seed rounds; instead opting for:
- Friends & Family rounds
- Straight to Big Private Equity
- Management as an Operating Partner (heavy lifting)
It’s not that this is a bad idea. Actually, I think it’s the right idea for raising on the HoldCo level. Work with people you 1) like 2) feel like you can trust.
But for a newcomer VC or newcomer Manager, this is a hard shell to crack, with good reason.
#3: There are middlemen.
Awkward if you’re a Junior Manager reading this, but… this is true.
It’s also not always the manager. It can be an individual agent, a best friend, a parent. There are loads of different kinds of middlemen.
Fundamentals of Sourcing
Skip this part if you’re a VC - lol. Nothing new. This section is for mostly talent managers.
Sourcing means identifying and finding potential startups or entrepreneurs to invest in. As a Junior investor, the most important thing is how you source.
A. Funnels
VCs like to work on a never-ending funnel of deals. This re-cycles every weeks. New deal added… What about this old deal from last week?… Should we ask for more information?… How much are we invested? On and on. The funnel helps keep things moving with new, shiny things coming in for new conversations every week or so. There are three parts of the funnel. (I know I put only two in that picture, but you’ll get it.)
The Ongoing Funnel
Top of the Funnel: Building relationships with founders through networking, cold outreach, and inbound applications. Middle of the Funnel: Evaluating startups based on team, traction, and market fit. Bottom of the Funnel: Conducting deep diligence to select high-potential investments.
B. Pattern Recognition
The exact same as recognizing great founders early, you can come up with your own criteria that you think makes a great Founder or Creator.
Okay, now that we got the mostly obvious out of the way…
Methodologies for Sourcing For Creators.
Brass tax, to source for Creators, you do the following:
- Network-based sourcing
- Creator-based referral
- Incubator/talent-focused referral
- Co-investor referral
- Sector-specific outbound
- Being agency-friendly.
As always, if you have any particular questions, feel feel to reach out to em@pre-founder.com.
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