This chapter guides emerging fund managers on constructing a repeatable, defensible sourcing advantage. The core thesis: winning first or second funds requires demonstrable unfair deal access, fast decision cycles, and institutional operations from day one.
Founder fatigue with slow, spray-and-pray outreach creates opportunity for agile managers who deliver quick feedback and crisp terms. Speed and repeatability must be measurable, not anecdotal.
The Sourcing Advantage
LPs evaluate sourcing through one lens: "Do you have unfair access, and can you prove it?"
Success requires demonstrable, measurable sourcing capabilities:
- Map sourcing channels (operators, accelerators, angels, CVCs, universities) with named contacts and relationship owners
- Track conversions from intro to investment with cycle-time metrics showing speed advantage
- Publish internal SLAs (example: 8-12 weeks intro to final answer) and measure against them
- Document named operators who produce quarterly referrals with specific contribution data
- Codify pattern recognition in deal logs so pass reasons become legible and institutional
- Organize data room to mirror allocator expectations for operational due diligence
Sourcing Moat #1: The Network
Build systematic relationships across five key channel types, treating each as a quota-carrying source with measurable output.
Operator Bench
Treat advisors as quota-carrying channels. Build a roster by domain (payer sales, industrial GTM, logistics) with light SLAs:
- One founder roundtable per quarter with your target company profiles
- Two reference calls monthly to support active diligence
- One product/buyer intro quarterly to portfolio companies
Tag every intro in CRM with operator name, function, company archetype, and track conversion. Share quarterly leaderboard showing which operators drive highest-quality deal flow.
Accelerators & Programs
Publish a coverage map showing YC/Techstars/500 Global batches tracked, attendee names, and post-batch offerings (office hours, pricing workshops, buyer panels).
Log batch ID, companies contacted, meetings, diligence started, invested, and average decision time. Create a one-page Program Scorecard in the data room showing your accelerator relationship ROI.
Angel Syndicates
Identify 15-30 high-volume angels in your vertical. Establish monthly rhythm:
- "2 asks / 2 offers" email format (founder needs; how you help) with tracked referral links
- Create lightweight angel pack explaining qualification criteria and sample questions
- Close loop within five days with 3-line status update on any referral
CVCs & Strategics
Propose quarterly pipeline syncs with corporate venture teams:
- Share theme heatmaps; request internal problem statements they're seeing
- Agree simple co-invest protocol with reusable one-pager
- Track separately, emphasizing pilot velocity metrics (intro → design partner → paid pilot → production)
Universities & Venture Labs
Pick 3-5 labs producing companies in your lane:
- Assign partner owner with accountability for relationship
- Hold monthly office hours with lab cohorts
- Sponsor annual prize to build brand within ecosystem
- Report lab-sourced deals like accelerator metrics in your funnel tracking
Sourcing Moat #2: The Insight
Insight changes whom you meet, what you ask, and how you help—then materializes in artifacts LPs can verify during diligence.
Market Thesis
Write one-pager per thesis with structured format:
- Claim: Your specific market hypothesis
- Counter-thesis: Why smart people might disagree
- 5-day validation plan: How you test quickly
- Kill-criteria: What would prove you wrong
Example: "Medicaid-adjacent digital health has 10-year wedge in benefits navigation; validate payer willingness in five days via three buyer calls and two claims data partners." Date revisions to show learning velocity.
Content-First Signal
Ship monthly memo teaching one seam with screenshots, KPI ranges, procurement tactics, compliance checklists. Close with:
- "How we'll test next month" showing ongoing learning
- "What we're not pursuing" demonstrating discipline
Mirror external voice in data room with ILPA-aligned reporting and Research SOP. Content should generate inbound deal flow and LP interest simultaneously.
Question Bank
Codify 8-12 questions answerable in five days that differentiate your underwriting:
- Payer validation path and reimbursement mechanics
- Channel unit economics and customer acquisition cost structure
- Regulatory gates and timeline dependencies
- Data rights and defensibility of technical moat
- Switching costs and customer lock-in dynamics
Tie each to toolkit: template buyer email, 30-minute pricing survey, data schema for cohort analysis. Show how you answer questions competitors can't.
Insight → Sourcing Loop
Every memo generates shortlist (10 founders, 5 buyers, 3 partners). Track conversion from "read memo" → "took meeting" → "shared KPIs" → "term sheet." This proves content drives deal flow, not just thought leadership.
Sourcing Moat #3: The Process
Institutionalize your deal flow with systematic tracking, clear ownership, and measurable velocity.
Deal Log
Single source of truth for every company reviewed:
- Date, source, theme, stage, ownership target, check size, IC owner
- Pass/advance reason coded from tight list (distribution risk, CAC/payback, data rights, regulatory gating, founder-market fit, pricing power, unit-econ sensitivity)
- Short free-text note and links to artifacts (memos, models, call notes)
Channel Attribution
Tag origin mutually exclusive: Operator, Accelerator (YC/Techstars/500), Angel, CVC/Strategic, University/Lab, Inbound Content, Portfolio Referral, Banker/Advisor.
Dashboard reports conversion by channel and median days between steps. This reveals which channels produce highest-quality, fastest-closing deals.
Pipeline Tiers with Dated Actions
- Tier 1 (invest-ready): 0-30 day term-sheet window; list 2-3 blocking questions and D1-D5 validation steps
- Tier 2 (seed-ready): Capture milestone plan and check-in date for when they'll be ready
- Tier 3 (early traction): Store hypothesis to revisit when triggers hit
Every card must carry Next Step + Date + Owner. No orphaned opportunities.
Velocity with Governance
Set SLAs and measure against them:
- 8-12 weeks intro→decision for net-new themes
- ≤4-6 weeks for pre-mapped seams where you have deep expertise
- Track median and 80th-percentile cycle times
- Publish monthly stuck list; clear in standing Pipeline Council
IC Gates & Memo Discipline
Define gates: Screen → Diligence → IC1 (go/no-go) → IC2. Two-page memo required at IC1 (thesis, risks, buyer map, unit econ); sources/uses + plan at IC2. Attach Week-1 kill-criteria to every memo.
Data Hygiene & Reporting
Automate dedupe, enforce required fields. Snapshot quarterly stats: companies reviewed YTD, pass-reason distribution, channel conversion, velocity. Drop redacted pipeline export and one-page dashboard in data room.
AI Workflow Integration
Recommendations for integrating AI tools into your sourcing and diligence workflows with appropriate governance.
Set the Spine: Policies, Roles, Guardrails
Write 2-page AI SOP defining what data enters models, who runs which tools, where outputs live. Add human-in-loop rule for any investment, performance, or LP-facing content. Log reviewer name/date. Create lightweight prompt library, version like code.
Founder Sourcing & Research
Pair research co-pilot with reasoning model to compress top-of-funnel. Summarize articles, extract facts, generate seam-specific shortlists. Draft one-minute brief per company with source URL/timestamp.
Signal Detection
Create daily Signals View pulling Crunchbase/LinkedIn: Actively Hiring, new VP Sales/Eng, 5+ open roles, executive churn, recent financing. Assign 0-10 score; auto-create tasks at threshold.
Diligence Automation
Standardize two-page IC memo skeleton. Feed call transcripts, product docs, customer notes to model to draft first pass. Require humans to complete buyer map, unit-economics table, key risks.
Portfolio Monitoring
Use portfolio system collecting monthly KPIs. Point model at feeds to draft portfolio snapshot, flag outliers, assemble founder-review talking points. Pipe same inputs to LP portal for quarterly updates.
Founder Enablement
Maintain three reusable playbooks: Pricing, GTM Hiring, Buyer Discovery. Use AI to tailor to company segment: generate sample ICP, discovery script, 90-day comp plan, first-pass pricing grid. Track dated interventions so case studies self-generate.
Data Room Governance
Choose VDR with SOC 2 Type II and ISO 27001/27701. Auto-tag uploads to room index, generate consistent filenames, draft doc abstracts. Add automatic PII scrub (names, addresses, bank details); block sensitive material from leaving VDR. Drop one-pager on encryption, access logging, incident response, vendor reviews.
Risk Management
Risk Management: Turn on usage logging: who prompted what, files accessed, changes made. Run monthly AI red-team hour testing prompts for hallucinations, data leaks, unauthorized claims. Update prompts/SOPs accordingly. Keep model register.
Operational Excellence
Standards across key operational areas that LPs will evaluate during ODD:
AML/KYC Onboarding
Spell exact LP path from interest to admission. Name stack (e-subs portal, ID verification, sanctions/PEP screening, beneficial-owner look-through). Publish SLAs:
- Document collection in 3-5 business days
- Screening within 24-48 hours
- Exceptions within 72 hours
Include exceptions matrix (trusts, foundations, offshore). Close with data retention note.
Cybersecurity
Condense to two pages covering:
- Controls: SAML/SSO, MFA, role-based access, device encryption, least-privilege, quarterly access reviews
- Data protection: Encryption at-rest/in-transit, DLP, MNPI handling
- Operations: Vendor due-diligence cadence, annual tabletop, penetration test, patch SLAs
- Evidence: VDR certifications (SOC 2 Type II, ISO 27001/27701)
Add one-page incident playbook with escalation contacts and timelines.
Valuation Methodology
Publish policy covering: frequency, governing body, methods by instrument, data inputs, challenge process. Include redacted valuation memo and pricing exception log. Align headings to ILPA DDQ.
Conflicts & Co-Invest
Decision tree for co-invest allocation, side-letter/MFN policy, GP commitment sources/uses. List disclosure triggers; show LPAC template.
Reporting Automation
Monthly operating dashboard (MRR growth, gross margin, cash runway, hiring, churn); quarterly financial packs aligned to ILPA 2025 Templates. Note delivery standards (T+30 draft, T+45 final) and portal. Include sample capital account statement and K-1 timeline.
Team Cadence
Document weekly IC with published agenda (pipeline, stuck items, marks, decision logs, memo-by-default). Assign CRM owner with monthly data-quality audits.
Emerging Manager Checklist: Sourcing + Operations
Key deliverables to complete before fundraising:
Sourcing Strategy
- 3-5 page Sourcing OS defining lead vs. referral vs. inbound; list channels; show funnel
- Channel focus: Pick three producing wins; track quarterly conversion + velocity; report intros/month, conversion, median days, win-rate × speed score
- Operator board: List 5-10 operators with time commitments; shared calendar; log outcomes
Deal Tracking
- Deal log: Monthly export, 100+ companies YTD, source tags, coded pass reasons, links to notes and models
- Pipeline dashboard: Tier 1/2/3 breakdown with next steps and owners
- Velocity metrics: Median cycle time by theme, channel conversion rates
Policies
- One-pager for AML/KYC with redacted sample memo
- Valuation policy with frequency, methods, approvers
- Conflicts policy with co-invest decision tree
- Cybersecurity overview with incident playbook
Key Metric: Track intros/month, conversion %, median days to decision, and win-rate × speed score. These four numbers tell LPs whether you have a real sourcing engine or just stories.