&gt; Wouldn&#x27;t that be a lot more efficient if investors just referred unknown companies to a buddy who knows the domain area?<p>That definitely happens. Most angels or VCs have a domain they are interested in and outside of that they will simply not participate or refer. Happened to me less than a week ago so definitely this occurs and fairly frequently.<p>&gt;  I don&#x27;t see it happening.<p>It depends on how close to the fire you&#x27;re sitting and who you are talking to I guess. In my &#x27;backyard&#x27; it happens, frequently and the number of times that a deal is not even looked at is high enough that I never even thought this might somehow be special.<p>Another thing that will happen is that the party that did the referral will still take part in the round but at a much lower level.<p>This is a very fluid world you&#x27;re trying to capture, local customers, connections and cliques will make up a lot of the background for such deals and you&#x27;d have to take all of those into account when you try to factor something like this into your worldview.<p>Personally I&#x27;d rather not see angels lose their shirt in areas that are not their domain,better if that money gets spent a bit wiser and on things that they understand.