This article is adapted from FounderNest’s 2026 Scouting & Deal Sourcing Report, a deep dive into how corporate M&A, venture, and strategy teams are rethinking how they find and win the right opportunities.
👉 Download the full report here
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For most corporate teams, deal sourcing strategy starts with a familiar ritual.
Commission a market study, receive a 200-company Excel file, feel reassured by the volume., and assign analysts to “screen” the list.
Then reality sets in.
Roughly 80% of the companies are irrelevant. Another 15% are already well known to everyone in the market. And the remaining 5% may or may not exist in a form that matters strategically.
What looks like coverage is often just noise.
And higher volume creates false confidence. Seeing more companies feels like progress, but it rarely leads to better decisions, faster execution, or differentiated outcomes.
Why long target lists create false confidence
The belief that “more is better” is deeply ingrained in corporate scouting and M&A.
Large lists feel comprehensive. They signal effort. They give the impression that the market has been mapped.
In reality, they often mask three systemic failures:
- Time wasted filtering instead of learning
- Analyst effort burned on irrelevant targets
- Strategic blind spots left completely uncovered
This creates what we call the coverage illusion: the assumption that visibility equals understanding.
Nearly 88% of executives say collaboration with startups is essential to their innovation strategy, yet without structured sourcing approaches, companies consistently miss promising opportunities or back startups without sufficient diligence.
The issue is not the number of targets.
The issue is how well the market is covered.
The sourcing coverage model: breadth × depth × freshness
High-performing deal sourcing teams evaluate coverage across three dimensions:
Breadth: Are you seeing the full market?
Depth: Do you understand what actually matters?
Freshness: Is your intelligence current or stale?
Weakness in any one dimension undermines the entire sourcing effort.
Let’s break each one down.
Breadth: Are you actually seeing the full market?
Most traditional market intelligence databases focus on the same inputs:
- VC-funded startups
- Public company filings
- Press releases and news coverage
This creates systematic blind spots that compound over time.
Teams consistently miss:
- Bootstrapped companies with strong revenue traction but no VC backing
- International players solving the same problems with different business models
- Academic spinouts and research lab commercialisations
- Corporate carve-outs operating in quiet periods
- Adjacent technology providers classified under different taxonomies
The result is a distorted view of the market that favours visibility over relevance.
True breadth does not mean tracking tens of thousands of companies. It means ensuring that the right companies are visible, including those that do not actively market themselves or fit conventional labels.
The goal isn’t to build a bigger list, it’s to ensure the right shortlist exists in the first place.
Depth: Understanding why a target actually matters
A standard company profile tells you what a company is.
It doesn’t tell you why it matters.
Firmographic data such as location, funding, and employee count are table stakes. They fail to answer the questions that determine deal success:
- What specific problem does this company solve, and how defensible is that solution?
- Who are their real competitors, not just the ones listed on their website?
- What signals indicate momentum versus decline?
- How well do their capabilities align with your strategic gaps?
- Would their culture, operating model, and incentives survive integration?
Depth means understanding the logic behind relevance, not just the existence of a company.
That requires analysing:
- Product evolution and underlying technology stack
- Customer concentration and go-to-market positioning
- Team background, turnover, and execution track record
- Partnership ecosystem and strategic dependencies
- IP portfolio and innovation trajectory
Without depth, teams confuse activity with insight and familiarity with fit.
Freshness: Why stale intelligence kills good deals
In fast-moving markets, relevance decays quickly.
In software and technology-enabled M&A, a company’s strategic value can change materially in 90 days or less.
A target pivots into or out of your core thesis or wins an enterprise customer that resets valuation expectations. Competing acquisition interest eliminates exclusivity, technical setbacks alter risk profiles, and new product launches expand or narrow strategic fit overnight.
Traditional quarterly research cycles miss these inflection points entirely.
By the time teams act on intelligence that is 3 months old, the opportunity has already shifted.
This is why leading teams move away from static research toward signal-led, continuously updated intelligence that reflects current reality rather than historical snapshots.
Freshness is no longer a “nice to have”. It is a prerequisite for competitive sourcing.
Best practices for improving deal sourcing coverage
High maturity sourcing teams run quarterly coverage audits and consistently answer four questions:
- What % of the total market are we actively monitoring for each strategic thesis?
- Which segments or geographies are systematically missing from our view?
- Where are we duplicating effort across teams and tools?
- How quickly do we detect new entrants, pivots, or inflection points?
It’s an opportunity for teams to put aside their pride and the metrics that “look better” than they actually are and focus their attention on results over coverage.
However, this shift in strategy and mindset is easier said, than done. The strategy needs to be clear, the goal defined and every key stakeholder needs to be onboard with that.
Why coverage, not volume, wins deals in 2026
As dealmaking becomes more selective and competition intensifies around fewer assets, sourcing quality is becoming a decisive advantage.
Teams that rely on long lists feel busy but move slowly.
Those that optimize for coverage move early, build conviction faster, and avoid crowded processes altogether.
For a deeper look at how leading organisations are rebuilding their deal sourcing strategies around coverage, signals, and continuous intelligence, explore the full 2026 Scouting & Deal Sourcing Report.
