Traditional deal sourcing is broken
Stop contacting the same companies as everyone else in your market.
Verus Echo leaves behind traditional mechanisms such as industry classifications, keyword searches, or AI recommendations. Our custom sourcing solutions scan terabytes of information and fine-tune your search with a multi-dimensional search algorithm, Generative AI, and proprietary datapoints to deliver outlier results.
Shortlist thousands of leads for any mandate in minutes.
Source your next deal with a custom sourcing solution.
Outbound sourcing is something that's near (but perhaps not so very dear) to the hearts of every investor.
On your quest to find relevant acquisition targets, you've likely nurtured relationships for many years, attended every industry conference, participated in dozens of auctions with all your competitors, purchased a myriad of data products, and hired offshore teams to manually scan the internet.
We've laid out these sourcing methodologies in the below framework.
While all of these methods have their merits (and most should definitely have a place in your overall deal sourcing strategy), we noticed that once a market got too competitive, or an investor wanted to scale up from several deals a year, most of the items in the table no longer gave them the deal flow necessary to support their growth.
Sourcing Method
Volume
% Success
Cost
Time
Competition
Scalability
Personal Connections
Low
High
Low - High
High
Low
Low
Broker Relationships
Low
Medium
High
Low
High
Medium
Events or Conferences
Low
Low
High
High
Medium
Low
Social Media
Low
Low - Medium
Low
High
Low
Medium
Deal Marketplace
Medium
Medium
High
High
High
Low
Google Search
Low
Low
Low
High
High
Low
Data Products
High
Low
Medium
High
High
Medium
Custom Lead Engine
High
Medium
Medium
Low
Low
High
Read the case study
Notoriously tedious to identify and often misclassified by traditional data products, many vertical market software companies have eluded all but the most resourceful investors.
This case study sheds some light on how the Kiosk vertical market software data platform was able to solve this problem by providing high quality and affordable data to investors of all sizes across the globe.
How the Kiosk platform solved vertical market software deal sourcing
The problem with data-driven sourcing
Data-driven sourcing is a numbers game that focuses on attaining a large volume of leads with an expected low probability per lead. This can be done through a combination of basic Google Search, niche directories such as review sites, and traditional data products.
Data-driven sourcing looks fantastic on paper:
- $20K for a data product per year
- $10K-15K for an offshore resource per year
- 10K relevant leads mined per resource per year
Even with a yearly lead to close of 0.01% that's 1 deal a year per resource or $35K per deal. With 5 offshore resources, that's 5 deals a year at $19K a deal.
And the numbers could look even better depending on how much you can play with the numbers.
However, there is one major red flag with data-driven sourcing - all your competitors can replicate your strategy if you look for the easiest solution.
In particular:
- All your competitors will buy the same data products.
- Everyone will find the easiest 50% of companies from each data product by utilizing industry filters, simple keyword search, or AI recommendations.
- You will all call the same companies and increase the probability that the seller will hire a sell-side broker to manage the process.
- Low-cost resources mean you will fill your database with a lot of junk (either irrelevant or out of business companies).
- Anything proprietary that you do find, you will upload it to the data product by way of a CRM sync/integration and expose it to all of your competitors.
That doesn't mean data-driven sourcing can't be successful - it just needs to be done in a thoughtful, proprietary, and custom way.
Our Process
Verus Echo's custom sourcing solutions discover companies in the 50% of the market not discoverable through mainstream data products.
We search across terabytes of information and fine-tune our search with an advanced search algorithm, Generative AI, and proprietary datapoints to find any company in any geography or industry.
Schedule an introductory call to learn more about how you can get ahead of your competition and increase your proprietary deal flow.
Introduction
Foundation
We also aim to understand:
- How hands on is your lead qualification process?
- Does the project require supplemental development of a data warehouse or reporting infrastructure?
Design
- Building a full understanding of your investment mandate
- Identifying relevant data sources and sourcing methodologies
- Understanding what customizations need to be made to our sourcing and classification algorithms
- Identifying and analyzing any potential data quality issues
Development
- Leverage proprietary sourcing methodologies and algorithms to build your solution
- Perform lead quality testing and manual qualification to ensure leads meet your mandate
- Meet with relevant stakeholders at frequent intervals to assess quality and manage changes
Release
Support
The support stage includes:
- Supporting the lead sourcing engine
- Expanding the sourcing engine to implement any new data sources or investment mandates
- Monitoring and adjusting the performance and availability of your solution
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