Deal-flow newsletters surface gold nuggets for investors

Will Y Combinator one day fund 1,000 companies per batch? Its president, Geoff Ralston, doesn’t think that’s impossible. But for the tech press, the possibility creates a conundrum: We can do our best to pick favorites, but we can’t cover every single promising startup in its early days.

This situation, it turns out, creates an opportunity for an emerging source of startup curation: deal-flow newsletters.

“The early-stage part of the tech industry deserves to be documented as it’s where every startup’s journey begins, and there are so many compelling ideas being tried,” said Martin Bryant, whose PreSeed Now newsletter launched today. “This newsletter’s sweet spot is companies that have moved beyond an idea on the back of a napkin but are yet to raise external equity investment.”

Investors are the target audience of PreSeed Now and its peers, such as Spain’s Vermú. The new U.K. newsletter doesn’t have numbers to share yet, but Vermú does, and they show proof of demand: It garnered 4,500 subscribers in mere months.

Do investors want what deal-flow newsletters offer? And what’s in it for newsletter creators and the startups they feature? Let’s dive in.

The paradox of choice

There are several reasons why investors sign up for a deal-flow newsletter, Bryant and Vermú co-creator Aitor Rodríguez told TechCrunch.

Business angels are a big part of the readership, as are early-stage VCs — both types of investors are constantly looking for outstanding startups to add to their pipeline. As for later-stage funds, they like companies to show on their radar well in advance to know what’s coming.