In mature venture markets, investors don't track deals. They track people and companies. The deal comes last.
I keep hearing this from investors in more developed ecosystems. When I describe how early-stage funds in our region manage their pipeline, the answer is often the same: almost nobody there would call their system deal tracking. A deal is what comes together at the very end: a term sheet, a price, an offer. Everything before that is knowing the people.
Where deals actually come from
The research says the same. In a survey of nearly 900 venture capitalists, Gompers, Gornall, Kaplan and Strebulaev found that:
- Over 30% of deals come through professional networks.
- 20% are referred by other investors, and 8% by existing portfolio companies.
- Almost 30% are proactively generated by the investor.
- Only 10% come inbound from the company itself.
The same survey asked what matters most when choosing an investment. 47% of firms named the team, more than any other single factor.
So 90% of deals come from somewhere other than an application, and the most important factor is the team. The unit worth tracking is a person, then a company. The deal is a moment in that story.
Tracking before the company exists
In a competitive market, you want to know founders before they start. The engineer who keeps shipping side projects. The operator who just left a fast-growing company. The researcher whose work is about to become a product.
When that person starts something, the investor who already knows them gets the first call. By the time the company opens a round, the relationship is months or years old. The fund that meets them on day 1 of the round is a stranger competing on price.
This is the same point I made in my last post. Founders now get further with less money. The best companies raise later, when they are ready to grow. Funds that wait for applications will meet them last.
The ecosystem spectrum
It helps to see ecosystems as a spectrum. Silicon Valley at one end. Then Israel and the larger European markets. Then markets that have been through a few startup cycles, with funds, exits and repeat founders. Then younger ones, still building their first generation of companies. The Caucasus and much of Central Asia sit there.
As an ecosystem matures, the way investors work changes. Early on, the pipeline is an application form. Funds and accelerators ask founders to come to them, and they review what arrives. Later, the best founders have options and don't need to apply. Investors go out and find them. The application stays open, but it stops being where the best companies come from.
The gap in our region
Mature markets have data to support this. In the US there are several companies competing to map every startup and founder. Investors complain about the subscription price, but the information exists.
In the Caucasus, Central Asia and the GCC, much of it does not. There is no shared picture of who is building what. Most of what is known sits with a few people who go to every event, and it rarely carries over from one program or one year to the next. A founder who applied to a program 2 years ago, got rejected, and has since found 50 customers is often invisible. Nobody followed what happened next.
Some investors already track companies on their own, with a personal watch list and a daily check for news. It works, but it only covers what one person can follow.
What tracking shows beyond deals
Finding the next deal is only part of the value. The bigger part is seeing the whole picture.
When you follow the same startups over months and years, patterns show up. Where teams stall: before the first customer, at the first hire, at the first round. Which sectors keep producing founders and which stay empty. Which skills are missing again and again, like sales, product or finance. Which programs move companies forward, and which only end in a demo day.
Today most of this is anecdote. Everyone in our region has a theory about why startups stay small. Very few have the data to check it.
With that data, a country can work on causes instead of guesses. If many teams stall at the same stage, that stage needs a different kind of support. If strong founders keep moving abroad after their first round, that is a funding gap, and it can be measured. Funds, programs and governments can design for the problems that actually exist.
Startup quality improves when its problems are visible. Tracking is what makes them visible.
The short version
Deals are the last step. People and companies come first. Investors in mature markets already work this way: most of their deals come through networks and their own search, not through applications.
Our region does not have to wait for that maturity. Track founders and teams before they raise. Keep their history, not only their latest application. Use what that history shows to fix the problems that keep good startups small.
The ecosystems that know who is building, and where they get stuck, will be the easiest to invest in and the fastest to improve.
