Screening Funnel

The stages an opportunity passes through from arrival to investment, usually intake, first look, diligence and decision, each with its own time cost.

Example

400 arrive, 80 get a first look, 18 get diligence, 6 are invested in.

Important

Diligence is where most hours go, so the filter immediately before it is the highest-leverage place to improve.

Related terms

• Hit Rate — The share of opportunities seen that become investments.
• Deal Flow — The stream of investment opportunities that reach an investor, across every channel they arrive through.
• Disqualifying Question — The single question, derived from your thesis, whose wrong answer ends the conversation regardless of everything else about the opportunity.

Lessons that explain it

• How many do you have to see to make one investment? — Put real numbers on your funnel and two things become obvious: how fast a first look has to be, and how much sourcing you actually need to support the portfolio you are trying to build. (12 min)
• A process you actually run beats a better one you do not — Screening only compounds if it is written down, identical every time, and produces a record - which is what turns a year of declined opportunities into knowledge about a category. (11 min)

All 578 terms in the Investing glossary