The Myth of Proprietary Deal Flow

Every VC fund claims proprietary deal flow. It is in every pitch deck, every LP letter, and every conference panel. "Our differentiated sourcing engine provides access to deals other funds do not see." In practice, almost every deal sees 3-5 term sheets. Proprietary deal flow is one of the most persistent myths in venture capital.

Why the Myth Persists

LPs want to hear about proprietary deal flow because it implies better entry prices, less competition, and structural alpha. GPs want to claim it because it differentiates their fund from the 5,000 others raising capital. The incentives on both sides reinforce the narrative.

But the math does not add up. In a market where founders can access any VC in the world through an email introduction, where accelerators share deal flow with dozens of funds, and where LinkedIn makes every investor discoverable, true proprietary access to companies is vanishingly rare.

What "Proprietary" Usually Means

When funds claim proprietary deal flow, they typically mean one of three things:

1. First meeting advantage. They heard about the company before other funds. This is valuable but not proprietary — it is a timing advantage, not an access advantage. The company is still free to meet other investors.

2. Relationship-driven access. A portfolio founder or close contact made the introduction. This is common and useful, but it is not exclusive. The same founder is often making introductions to multiple funds.

3. Inbound from brand. The fund's reputation attracts founders who reach out directly. This is the closest thing to proprietary, but it is also the hardest to build and the slowest to develop.

What Actually Creates Sourcing Edge

Speed. Seeing a company two months before other funds — when the signals first fire — creates a real advantage. You have time to build a relationship, offer help, and position for the fundraise. Signal-based sourcing systematically delivers this speed advantage.

Thesis depth. Deep expertise in a specific sector means you understand what you are looking at faster than generalist funds. You can make decisions quickly because you have the context. Thesis-driven sourcing amplifies this by ensuring you see every company in your thesis universe.

Signal coverage. Most funds have blind spots: sectors they do not track, geographies they ignore, company types they overlook. Systematic signal monitoring eliminates blind spots. You see everything that matches your thesis, not just what your network surfaces.

Outbound conviction. The willingness to reach out proactively to companies you have identified through signals, before they are fundraising, creates genuine first-mover advantage. Most VCs are passive. The ones who combine signal identification with proactive outreach consistently see deals earlier.

The Honest Pitch

Instead of claiming proprietary deal flow, the honest pitch is: "We have a systematic sourcing process that identifies companies earlier than our competitors, a deep thesis that allows us to evaluate quickly, and the conviction to reach out proactively before a fundraise begins."

That is a real edge. And it is one that signal-based sourcing tools like Ted make achievable for funds of any size.