Nearing the end of last year, we interviewed and surveyed as many US-based VCs as we possibly could about deal flow. Specifically that between cold solicitations, outreach and the differences to their counterparts: warm introductions.

One of our more recent compiled findings has finally taken shape: In the United States, and of the VCs who chose to participate in this study, 64% of a VC’s overall deal flow comes in from a cold source (i.e. companies who make contact with a Venture Capitalist after having no prior contact or relationship), 26% comes from a warm source (i.e. companies who are introduced to a Venture Capitalist by someone the Venture Capitalist knows) and the remaining 10% comes from outbound scouting and sourcing.

However, after calculating the probability of various stages, a warm introduction is certainly the stark preference by many.

FROM ANY SOURCE

Combining all pitchdecks from all sources…

there is about a 17% chance that any given pitchdeck will make it from round 1 to round 2 and,

and, a 2% chance when a company reaches an investment committee that they will receive funding (moving from round 2 to round 3 of the process). But all pitchdeck sources are not created equal.

FROM COLD

Evaluating only the companies who had no introduction or prior relationship with the VCs, we see our numbers change significantly. If we were to then remove both the warm and the outbound contact types, we find that

there is about a 1.19% chance of getting to an investment committee and,

and, once there, a .38% chance of getting funding.

FROM WARM

Next, we calculated the probability for companies who were a warm introduction (having a pre-established relationship with the VC or having someone with a pre-established relationship make a connection. Companies with a warm introduction to a Venture Capitalist had…

a 26% chance of getting to an investment committee and once there,

and once there, a 4.6% chance of getting funding.

The focus on warm leads versus cold is certainly nothing new to those who are familiar with the VC world. Having someone of credibility vouch for you certainly has some truth in every industry, and this one is of no exception. However, the wheels of curiosity begin to churn when it comes to efficacy data of these introduced companies.

Follow with me for a moment:

If we can assume that the vast majority of venture-backed companies were found through warm introductions, can we also then assume that they have a higher degree of performance and overall chance of success, or is this a myth? We wanted to know.