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How does an investment fund source its deals? What is the difference between proactive and reactive sourcing?

Published on 18/08/2022
Contributor(s): Jean-Marc Legrand

Proactive and reactive

Identifying the right entrepreneurs to partner with must be the cornerstone of the investment strategy. It is an open door to point this out. Most funds and investors align themselves with two methodologies: proactive and reactive.

Entrepreneur view

Proactively, financial and qualitative filters are used to identify companies that funds and investors would like to partner with. This approach is therefore that of the investors and not the result of a solicitation from the entrepreneur.

Investor view

In a more reactive way, the strength of a network makes it possible to be regularly contacted by entrepreneurs seeking growth capital. Here, too, it is interesting to learn, to share and to understand at each meeting, the entrepreneurs are listened to and evaluated to confirm that there is room for alliance by applying the selection criteria specific to each investor.

At TheClubDeal

What is TheClubDeal’s sourcing DNA? We often talk about so-called activist funds, those that challenge management… At TCD, our DNA is to be pro-activist. Proactive in the constructive challenge, throughout the relationship with the entrepreneurial partners. From sourcing to value creation.

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