Sir Isaac Newton once wrote, "If I have seen further, it is by standing on the shoulders of giants." Our research shows that the "giants" of dealmaking are those that rely on data and technology to find and close deals.
The more sophisticated a firm's use of data and technology, the higher their IRR and the greater their deal flow. Technology-enabled firms transact 55% more than their less data-savvy peers. But what specifically are these "giants" doing that we can learn from?
We recently hosted a webinar with two of Sourcescrub's originals, Sharon Wu, our head of account management, and VP of Product, Josh Giglio, to hear about the best sourcing tactics they've uncovered after years spent working with leading firms. Here are 3 of the top 10 direct sourcing secrets our experts shared.
Highly successful firms pay close attention to their competitors and how well they're performing. "You have playbooks and processes that are being demonstrated in a highly competitive market around you," says Josh. "Take those successes and integrate them into your own processes."
One of the best ways to do this is by analyzing top competitors' portfolio companies for common data points and characteristics. For example, maybe these businesses share a particular growth trajectory, historically attend the same conferences, or gain similar industry recognition. Uncovering these trends allows you to better understand the signals your competitors are looking at and tweak your investment thesis accordingly.
Over the last several years, our experts have seen PE and investment banking firms adopt a SaaS sales and marketing model to proactively reach out to potential opportunities. Doing this effectively requires the right balance of scale and precision "one that firms are able to strike thanks to automation. Or, as Josh calls it, "automation with intention."
Sharon further explains that the firms that do this well are, "Using differentiated strategies and messaging for targets that are at different levels or stages of the funnel." It makes sense to spend time deeply customizing outreach to Tier 1 prospects. But for the rest, these firms leverage fully-integrated tech stacks with powerful sales and marketing tools to automatically personalize emails with prospects' first names, company names, industries, and other details.
Data is valuable, but without a unique point of view it quickly becomes a commodity. That's why top firms are combining publicly available data with information from their own CRM systems or internal brain trust. They're leveraging data science to build models and run complex analyses that generate proprietary insights and create competitive advantage.
Whether this involves developing a specific algorithm or building out an entire data warehouse, it's important to remember that there's no one-size-fits-all approach. To get started, Josh recommends asking yourself, "What are the most relevant content, signals, insights, and tools my investment professionals need to succeed? And is this information centralized?"
When done right, the results speak for themselves. Our experts have seen a 3x increase in deal volume from firms that use Sourcescrub data to help create their own proprietary data assets.
Standing on the shoulders of giants is the fastest and surest way to become a "giant" yourself. Reverse engineering competitors' success, scaling outreach with automation, and creating a proprietary data asset are just 3 of the top 10 direct sourcing secrets that our experts shared.
For the rest, watch the full webinar on demand, Sourcing Master Class: Top 10 Proven Ideas from Dealmaking Leaders.