Investors, do you invest in the first deal from a searcher?

November 14, 2025

by an intermediary from Bentley University in Charleston, SC, USA

An investor shared he never invests in the 1st deal a searcher brings. If you invest, is this a rule you have for yourself? Why or why not? I’m looking for a few more perspectives on this.

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Reply by an investor
from Vanderbilt University in Nashville, Tennessee, United States

Thanks ^redacted‌. Shamil - you have a fair question. This is a sentiment I have heard - both in terms of first deal shown & first time searchers. I share ^redacted‌'s perspective on this subject. In general, reps with an investor will help you understand their investment objectives & perspective better. So by the 3rd, 4th, or 5th deal, you will understand their criteria better and naturally select investors that will be most interested. With that said, what you describes sounds like an investors due diligence process. He "doesn't do any first deal" because they want to see how the searcher operates and use reps to build confidence in the searchers capabilities. I believe you can get past the repetition/relationship building diligence with investors by building those relationships before you have your first deal. Build those relationships early so by the time you are showing your first "deal" they already have checked the diligence box on the searcher and can just focus on the underlying company.

Reply by an investor
from Wesleyan University in Dedham, MA, USA

That is an insane idea. In collaboration with a searcher its about where the sophistication of the searcher has developed to and the merits of the deal. Often there is an ongoing dialogue about the deal pipeline. And when something is promising there are questions and diligence and terms and approach. But if the searcher's first signed LOI is a great deal of course the investor should do it. I can think of several times where I invested in the first signed LOI which turned out wonderfully. There are no hard and fast rules like this that make any sense. This is about relationship between searcher and investor and searcher and the marketplace.

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