Deal Sourcing Earns Carry

Shaan describes a passive deal flow strategy for angel investing, comparing it to dipping a net into a stream rather than actively fishing. The approach leverages personal networks and reputation to access investment opportunities without extensive active sourcing.

Key Points:

• Deal Flow Strategy:

  • Leverage existing networks and personal connections
  • Use popularity from podcast and Twitter to attract inbound deals
  • Access deals through friends and personal network
  • No active door-knocking or extensive pitching required

• Initial Strategy Without Capital:

  • Partner with wealthy investors
  • Source deals for them in exchange for carry
  • Example success: Lambda School investment through this method

• Evolution to Direct Investing:

  • Transitioned from earning carry to direct investment as capital became available
  • Scaled up through rolling fund structure
  • Deploys approximately $1M per quarter
  • Deal flow comes naturally through network effects

• Key Benefits:

  • Learning vehicle for new industries and trends
  • Network building with interesting people
  • Cross-pollination of ideas between investments and primary business
  • Way to "blow off entrepreneurial steam" while staying focused on main business

• Time Management:

  • Monthly investor updates
  • Minimal maintenance required
  • No requirement for extensive meetings or calls
  • Deals come inbound rather than requiring active sourcing