Private companies are not listed anywhere. Networks determine the deals an investor hears about, the quality of diligence they can do and whether founders choose them.
9 min read · Level 5
I think an investor's network is best measured not by how many people they know but by how many would call them first about a company they believe in. That number grows slowly, only through being useful and trustworthy, and it is the real foundation of a private investing practice.
In public markets, every investor can buy the same shares. In private markets, access depends on relationships.
A network does four jobs:
Job What it provides Access hearing about good companies early Diligence experts, customers and references to check claims Co-investment partners to share rounds and reduce risk Selection founders choosing you because of your reputation
Where one angel's deals came from over two years:
Source Deals seen Invested Other founders in portfolio 18 4 Co-investors and syndicate leads 14 3 Industry contacts 9 1 Cold inbound 21 0 Total 62 8
Cold inbound was the largest source and produced no investments. 7 of 8 investments came from founders and co-investors (4 + 3).
Because the best early-stage companies often raise quickly through trusted introductions, before any public announcement. Investors without networks see more of what others passed on - the adverse selection problem.
Networks also improve decisions, not just access: a single call with the right expert can change a diligence conclusion.
Educational, not personalised financial advice. Nothing in the Investor Academy is a recommendation to buy, sell or hold anything — what is right for you depends on your own circumstances and the rules where you live.
The same company, two investors.
Investor A hears about it from a founder they backed, who worked with the CEO for four years. They also know two potential customers to call. Investor B receives it as a cold deck three weeks later, after the round is mostly filled.
Investor A has better information, earlier access and a credible reference. Investor B has a deck. The company is identical; the investor's network made the decision easier and better for one of them.
Treating deal flow as something that arrives by inbound email, rather than something built through relationships over years.
Record the source of each deal you see and invest in.
Find which relationships produce the deals you actually invest in.
Spend time where quality deal flow and diligence help come from.
Develop experts and customers you can call in your focus areas.
When planning how to find and evaluate private investments over the long term.
Do not treat networking as collecting contacts; the value comes from relationships of trust and mutual usefulness.
Survey-based research on venture capital decision-making, including a widely cited study by Gompers, Gornall, Kaplan and Strebulaev, found that a large share of deals came through professional networks and referrals rather than cold inbound approaches.
Even professional investors source most investments through relationships.
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