Fund Structure
What is Deal Flow?
Deal flow is the rate and quality of investment opportunities a fund manager sees. Strong proprietary deal flow — relationships that surface deals before they are widely marketed — is one of the most important competitive advantages for a GP.
Deal flow is the pipeline of potential investments reviewed by a fund. Top-tier GPs build proprietary deal flow through founder networks, sector expertise, and prior portfolio company relationships — allowing them to see deals before competitors and negotiate favorable terms.
LPs assess a manager's deal flow during diligence. Poor deal flow leads to adverse selection — only seeing deals passed on by better-networked funds. The quality of deal flow is a key predictor of portfolio quality.