Investors should set up a deal flow process that takes startups through in a timely manner.

Here are the deal flow stages:

Initial contact — before reviewing a deal there’s often a call or email that describes the deal.

It’s best to provide initial feedback and ask key questions about key criteria.

Encourage those that meet the criteria to apply, and discourage those that don’t.

Submission — the startup provides a deck or executive summary.  

Review the deal for your key criteria. It’s best to give a fast “no” so it doesn’t waste everyone’s time.

First call — set up a call with the ones that meet your criteria to learn more.

Explain how your diligence process works and the amount of time it takes.

Team review — review the deal with your team.

Determine additional questions to ask and decide the next steps.

Second call — the startup meets the team.

The team and the startup take a deeper dive into the business and everyone gets to know each other better.

Diligence —  the team starts diligence on the deal.

Discuss valuation and other terms. By now, both sides should be in the same range.

Closing — the team wraps up diligence and finalizes the investment documents.

Both sides should be looking to close. 

At each stage, educate the startup about the process and their status.

Thank you for joining us for the Startup Funding Espresso where we help startups and investors connect for funding.

Let’s go startup something today.

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Thank you for joining your host Hall T. Martin with the Startup Funding Espresso — your daily shot of startup funding and investing.

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Disclaimer:
Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.