As dictated by increased competition at a time of more stringent deal criteria, competition for deals in 2025 is set to be fierce. According to Affinity’s predictions survey, 42% of respondents believe competition will be a key factor influencing their deal flow (second only to economic outlook at 62%).
Whereas in 2024, the focus was on network building, today 50% of dealmakers see deal sourcing as their number one priority—with a slight preference for outbound sourcing.
This shift is something that Andre Retterath, Partner at Earlybird Ventures, has observed: “Historically, around 70% [of deals] were mostly inbound, driven by a great brand [...] We see that as competition increases among investors, a shift from mostly inbound to outbound—meaning investors need to [...] do their homework, desk research, be data-driven, [and reach] out to the most promising founders.”
Key factors influencing deal flow
Source: Affinity
The data challenge of deal sourcing
As alluded to by Retterath, deal sourcing is often actually a data challenge. There are only so many things (companies, signals, to-dos) a human can hold in their head and, as data volumes increase, so does the risk of overload. Data needs to be organized and centralized in a way that minimizes the risk of missed opportunities.
Sentiments common in today’s market speak to the challenge of pinpointing relevant companies at the moment they become deal-ready. Common questions include:
- “X company fit our thesis perfectly, and just got funded by Sequoia—how did we not even know about it?”
- “Y company was on our radar six months ago but we lost sight of their progress. They just closed a funding round with Bessemer Ventures. How can we keep a closer watch?”
- “We’ve seen and met Z company before, but didn’t stay on top of them and now they’ve been funded by A16z! How did we miss that?”
The way to seeing emerging deals before your competitors and understanding when and how to reach out is by leveling up how you collect, store, and use data in your sourcing strategy.
Invest in scalable solutions. Invest in your data. It's not always about the tools you're using, but about your ability to aggregate your data.
How to establish a robust data platform
For the most robust data platform, make sure your CRM is built for private capital—and make it the heart of your tech stack. Affinity is the system of record for more than 3,000 private capital firms, empowering data-driven dealmaking with automated activity capture, data enrichment, and relationship intelligence.
Workflow automation significantly improves data accuracy rates and Affinity automates manual record creation and updates by capturing contact data and activity from email activity, calendar invitations, and meetings.
Affinity automates manual record creation and updates by capturing contact data and activity from email activity, calendar invitations, and meetings.
Real-time capture ensures that your data is always accurate and up-to-date, minimizing human error and enabling everyone across your firm to trust what they see. Each team member can save hundreds of hours per year.
Affinity data is further enriched with unique, in-depth, hard-to-find information from industry-leading vendors like Crunchbase, Clearbit, Dealroom, and Pitchbook. Your team can use this data to understand and identify deals as soon as they match your thesis.
On a daily basis, we receive new companies into Affinity and updates on existing companies—and we have several other jobs and processes that are ingesting data into Affinity in a similar way. Because we get high coverage, we reduce the amount of time anyone is spending inputting information or researching information.
Data underpins the effective use of AI and, according to the Data-driven VC landscape report, there was a 26% rise in data-driven firms from May 2023 - May 2024. Of the nearly 300 dealmakers surveyed for Affinity’s 2025 predictions, 94% are planning to adopt AI in some way.
At the same time, the use of AI in dealmaking is maturing. Dealmakers have proven where it adds value and drives efficiency and where it does not. Top use cases include 76% of respondents using AI to automate daily tasks and 64% for researching companies.
In contrast, only 13% of respondents report using AI to decide whether or not to invest in a company—down from 40% last year. Jennifer Ard, COO at Intel Capital articulated this distinction, saying, “We will never have AI make investment decisions because so much of it is about the relationships; you're investing in founders, you're investing in people. But wouldn't it be great if things like legal documents were automated?"
Similarly, Markus Bohl, Managing Director, Europe at Intel Ignite, speaks to the role AI can play in alerting investors about which to deals to evaluate. He says, “For us as a company, [our focus is on] how [we can] augment our operations and [the] data advantage that we have with AI to see more deals, to see them earlier, and to better understand how big the pond is and the fish we’re looking for.”
Discover nine popular AI tools transforming the VC tech stack in this buyer’s guide.
Should you build or buy AI tools?
The debate between buying AI functionality or building it in-house is common in many VC firms today. It was a hot topic at Affinity’s Campfire conference and at Vestberry’s Venture Intelligence Day, where Keshvi Radia, Head of Product at Balderton Capital stressed the importance of choosing SaaS solutions and refining your team’s use of them before considering proprietary tools.
According to Affinity’s predictions survey, just over a quarter of dealmakers are thinking about building tools in-house. For those that are, consider these key questions:
- Do you have the resources or fund size for a big investment? Buying is a more pragmatic approach for many, as you get a dedicated product that is likely to improve at a faster rate than internal buildout.
- Are you building something that generates a unique edge for your firm? For a workflow like sourcing, scraping or building a proprietary dataset that no other firm has access to can give you an edge. On the flip side, rebuilding an entity resolution engine or building a custom UI on top of your sourcing data are already-solved problems.
- Can you build for future integration? AI-related technology is evolving quickly and there may be gaps in your tech stack that will soon be solved by a best-in-class vendor. Consider ways to organize data, establish access controls, and integrate data sources to ensure readiness for future platforms and market shifts.
Affinity has enabled us to avoid the need to spend a lot of money, time, and talent on building a purpose-built solution—and instead use an out-of-the-box tool specifically tailored to VCs' needs.
How to drive efficiency with automation and AI
At Affinity, we build AI and automation features that make deal sourcing more efficient.
- Automation Builder saves you time and narrows focus by automatically assigning deals to the right team, prioritizing deals based on a set criteria, and alerting your firm to new deals directly in Slack—among many other use cases.
- Industry Insights uses AI to generate a list of the most relevant competitors to the companies you view in the Affinity CRM or via an extension. Get AI insights in the flow of work and secure the best opportunities by making faster deal decisions.
- Affinity Notetaker automates note-taking and transcription creation and brings more dealmaking data into your Affinity instance—which is used to power other AI features. The tool uses our extensive understanding of private capital firms and roles to generate concise, error-free summaries that zero in on what matters most.
- Deal Assist, a conversational AI, gives you a new and faster way to interact with your data. Users can ask Deal Assist questions about specific companies and profiles, and the data and files associated with them. This minimizes the steps and time it takes to sift through information to locate data and conduct deal analysis.
AI at Affinity
Source: Affinity
Even with today’s shift to a more outbound deal sourcing motion, the most successful firms are still those that can rely on their network as a source of inbound opportunities. Harvard Business Review’s study of 900 top investors found that more than 30% of deals originated with former colleagues or work acquaintances, 20% through referrals from other investors, and 8% from existing portfolio company referrals.
Affinity’s own analysis of aggregated and anonymized platform activity data reveals that top-performing firms consistently add more contacts to their networks, and send and receive more emails per user. A long-term strategy of building and nurturing a productive professional network is crucial to unlocking and winning deals—especially in a competitive market.
Allowing our network to show value pre-investment is a good way for us to help support and win a deal, but it’s also a really interesting way for us to gather feedback from our own individual LPs on working with that founder.
The problem of relationship management at scale
Dealmakers in private capital have some of the biggest networks in the world. Every relationship is important because someone you meet today might enable the biggest deal of your life—only it might be five or 10 years down the road.
Yet, while dealmakers have the largest, fastest-growing networks where context is critical, they also have the least amount of time to maintain relationship data. Traditional CRMs fail private capital because they were never built to manage these types of relationships.
Firms with the technology to manage relationships at scale can turn them into a powerful source of deals. For example, by nurturing strong relationships with investors you respect (especially those that invest one stage earlier), you can monitor their portfolio companies for key inflection points, reach out via your network, and access great deals as early as possible.
Following a relationship-driven, tech-enabled strategy can turn your network into an organic deal sourcing machine. This has been the case for Robles Ventures, where, as Founding Partner Sergio Monsalve explains, “For 88% of our deals, we either get tipped off to the deal or directly referred by our network.”
Source: Affinity
How to uncover deals in your network
Affinity’s relationship intelligence streamlines the management of connections in an extended network. By analyzing vast amounts of data to surface overlooked connections and opportunities within your organization’s ecosystem, relationship intelligence reveals warm introductions: which of your colleagues knows the founder of a startup or the CFO at a prospective company, when they last met, what they spoke about, and how strong their relationship is.
Relationship strength scores also help you stay active with key connections. Automated triggers alert you when a connection to someone in your network is lagging and it’s time to reach out.
Affinity eliminated the friction in our relationship management and deal pipelines. The platform has fundamentally changed for the better the way we operate.
New sourcing strategies rooted in the fundamentals
The availability of data and rapid innovations in AI are undoubtedly changing how private capital dealmakers source deals. But the future of private capital deal sourcing is likely to be augmented. Protect your edge by harnessing new technological capabilities to support the fundamentals of a human-driven strategy: growing a network and nurturing relationships to more effectively source deals in a competitive, ever-changing market.
In today's world where capital has become constrained and growth is a lot harder, the 'picking' suddenly becomes more important, or seemingly more important. But it always mattered. Doing the work, finding the right investment, and having conviction in it because you've done all that work really matters in this job.
