deal flow

Definition

The rate at which investment opportunities come across a VC's desk. Good deal flow means seeing quality startups before everyone else; bad deal flow means getting pitched by anyone with a Squarespace website and a dream.

Example Usage

Moving to SF improved our deal flow dramatically—we went from seeing 10 companies a month to 50 per week.

Origin

Investment banking terminology from the 1980s

Fun Fact

Top VCs reject 99%+ of deals they see, meaning even with great deal flow, they're mostly saying 'no' all day—the diet of venture capital.

Source: Investment banking and venture capital operations

Related Terms

Intermediate

TAM/SAM/SOM

Total Addressable Market, Serviceable Addressable Market, and Serviceable Obtainable Market—three increasingly pessimistic estimates of how much money you might theoretically make. The trilogy of optimism, realism, and 'if everything goes perfectly.'

🚀 Startup / VC

Intermediate

moats

In medieval times, a water-filled ditch that kept invaders at bay; in modern business, the metaphorical competitive advantages that protect a company from rivals trying to steal its lunch money. Warren Buffett popularized this term to describe sustainable competitive advantages like strong brands, network effects, or regulatory barriers. The wider the moat, the harder it is for competitors to storm your castle and the more VCs will swoon over your pitch deck.

🚀 Startup / VC

Intermediate

spray-and-pray

An investment strategy of making many small bets across a wide portfolio, hoping a few massive winners will compensate for numerous failures—essentially portfolio construction as gambling. The scatter-shot approach favored by funds who believe they can't predict winners.

🚀 Startup / VC

Beginner

term sheet

A non-binding document outlining the key terms of an investment deal—think of it as a letter of intent that's about as reliable as a Tinder profile. The real fun begins when lawyers turn these bullet points into a 60-page agreement.

🚀 Startup / VC

Beginner

acquihire

When a company buys a failing startup primarily for its talent, with the product being immediately shut down. A face-saving exit that's really just an expensive recruiting strategy with better PR.

🚀 Startup / VC

Intermediate

up-stack

Moving to build or sell products at higher layers of technology infrastructure, typically where margins are better and you're further from commoditized infrastructure. The opposite of down-stack, and usually more profitable.

🚀 Startup / VC

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