| As recently reported in the Harvard Business Review, | | | | As is axiomatic in most other industries, the numbers |
| there is a new and unlikely entrant into the emerging | | | | game required to generate new business in venture |
| Social Media arena: The venture capital firm. | | | | capital follows the traditional cycle of identifying |
| Normally circumspect about their deal origination | | | | prospects, meeting with them under favorable |
| techniques, venture capital and private equity | | | | circumstances, negotiating and closing sales. Just as a |
| investors are increasingly placing their cards in full | | | | typical automobile dealer must keep 500 cars in |
| view on the Social Media table. | | | | inventory to sell 200 cars per month, the typical |
| According to David Teten, the CEO of Teten | | | | venture capital firm must review eighty opportunities, |
| Advisors, an investment bank specializing in sourcing | | | | meet with twenty management groups, negotiate |
| new investments, and his co-author Chris Farmer, a | | | | with four and perform due diligence on three, to |
| managing partner at Ignition Search Partners, a hybrid | | | | result in one investment. |
| venture search firm, a "first-ever study of | | | | Mr. Teten's firm "specializes in using Social Media and |
| deal-origination best practices at more than 150 VC | | | | other internet technologies to source proprietary |
| and PE firms, along with other research, shows that | | | | deals, which typically provide a buyer with an |
| some of the top-performing investors increasingly | | | | informational advantage and in some cases a lower |
| use such technologies to discuss the very information | | | | purchase multiple." |
| they once held close to the vest." | | | | Is this Social Media approach a trend that might |
| For aficionados of Social Media, it is no surprise that | | | | develop in other traditionally guarded industries? |
| B2C companies, like the Ford Motor Company, | | | | Perhaps. If sharing details about their investment |
| Mountain Dew Beverages and Dunkin' Donuts are | | | | strategy propels venture capitalists into successful |
| taking full advantage of emerging media and | | | | targets of opportunity, and if that Social Media |
| revolutionizing their business practices. However, | | | | engagement results in an improvement over keeping |
| what would motivate a venture capital and private | | | | their cards off the table, then other financial services |
| equity firm to join in the Social Media conversation? | | | | and insurance companies may follow suit. |
| The answer is deal flow. | | | | |