CRM security best practices for VC firms

A robust customer relationship management (CRM) system is integral to any dealmaking process. It centralizes deal-ready data and streamlines relationship management, making CRM software one of the most powerful tools in a venture capitalist’s (VC) toolbelt. 

The data and information it holds are part of what makes a CRM so valuable, but they’re also what makes it critical to protect.

In this article, we’ll explore common CRM security risks and share some best practices for securing your VC firm’s CRM software. 

Key takeaways

• Investing in CRM security is key to protecting confidential data for VC firms.
• Breaches in CRM security can create irreparable damage to customer trust and proprietary deal flow. 
• Risks to data security include malware, phishing, and unauthorized access. 
• Best practices for keeping your CRM secure include choosing a reputable vendor, boosting internal security practices, and conducting regular audits.

What is CRM security?

CRM security is the process of safeguarding the data held within your CRM software. It puts strategies and protocols in place to keep confidential firm information out of the hands of unauthorized parties. 

CRM data—from names and phone numbers to investor and deal information—is essential to nurturing relationships with customers and prospects and making deal decisions. The volume and nature of private information your CRM holds is what makes it crucial to safeguard.

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Why venture capitalists need to prioritize CRM data security

Data security should be a top priority for any organization in any industry. According to IBM, in 2024 the average global cost of a data breach was $4.8 million. And 93% of organizations had two or more identity-related breaches in the past year. 

VC firms are in the unique position of holding highly sensitive financial and personally identifiable data—not only of their own firm but that of their portfolio companies—elevating the consequences of data breaches.

In order to maintain trust and stay competitive, VC firms need to prioritize CRM security more than ever before. The top reasons for VCs to prioritize CRM data security include:

Reputation impact

A CRM data breach doesn’t just impact deal flow it also damages your reputation as a VC firm. 

VC deals are built on relationships and a foundation of trust. And all it takes is one incident to erode that trust. When portfolio companies or investors aren’t confident that their confidential information will stay private, it can be difficult—or even impossible—to get a deal across the finish line. 

Intellectual property protection

VC firms manage a large amount of data and information that are essential to their investment strategies, such as proprietary deal flow or portfolio company trade secrets. 

Data is one of the biggest assets for VCs. With CRM software functioning as the system of record for many VC firms, CRM security is a key factor in keeping that proprietary information safe.

Regulatory compliance

The world is becoming increasingly digital, which means cyberattacks are becoming more prevalent. The good news is that data protection laws and regulatory requirements are rapidly growing to protect organizations and their stakeholders. 

VC firms need to stay on top these data privacy and data protection regulations, such as GDPR or the SEC rules, to not only protect their stakeholders but avoid fines and consequences. 

CRM security threats and vulnerabilities

The security threats and vulnerabilities faced by VC firms are constantly evolving as hackers and malicious parties use more complex and advanced tactics. Understanding these threats is the first step toward protecting your firm’s data and information.

Common cyber threats include:

• Phishing attacks: This refers to deceptive tactics used to gain access to CRM data, such as fake emails, websites, or impersonation attempts.
• Unauthorized access: This includes any type of unauthorized access to your CRM data, including compromised passwords or credentials. It can also result from poor access control, such as granting login access to an unauthorized party.
• Malware: This can include any type of software that provides unauthorized CRM access, such as viruses or spyware, that could corrupt or damage software and compromise data.
• Insider threats: This refers to internal team members who may or may not have authorized access but copy, delete, or leak data. Insider threats can be accidental but they can also be intentional and malicious. 

How to secure a CRM system

Unfortunately, once your CRM system is breached, the damage is likely already done. You need to be proactive about data and cybersecurity to maintain and secure your firm’s data. Let’s look at some best practices for improving your firm’s CRM security.

1. Secure your IT infrastructure

Just as you’d lock up a physical office, you need to do the same with your digital infrastructure. This includes any software and hardware that can give unauthorized parties access to your tech stack and data—even beyond your CRM. Something as simple as a lost phone can quickly lead to a major data breach. 

Ways to secure your IT infrastructure can include, but aren’t limited to:

• Installing antivirus software and firewalls.
• Keeping software up to date.
• Limiting data access, including users and devices.
• Encrypting confidential data.

2. Choose a trusted CRM vendor

Your CRM is a trusted tool that holds a large amount of sensitive data, making it important to prioritize security when choosing your deal management software. VC firms in particular need a CRM that has strict security standards and goes beyond the basics of two-factor authentication (2FA).

Look for vendors that hold globally recognized security certifications and are compliant with international standards. Common certifications and standards for CRM software can include:

• SOC 2 Type 2
• ISO 27001
• ISO 27017 & ISO 27018
• ISO 27701

Don’t be afraid to ask questions about a CRM’s security protocol. The best CRM vendors should be able to share any additional processes they have in place to protect your firm’s data, including independent security audits, vulnerability testing, and data encryption. A CRM vendor that is unable to provide specific security measures should be a red flag. 

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3. Create data backups

The leak of confidential information is only one data security threat. Data breaches can also corrupt or irreparably damage valuable business data. Dealmakers rely on data to make decisions and maintain deal continuity, loss of that data can jeopardize relationships and disrupt deal flow. 

Regular data backups provide datasets to fall back on in the event of system failure. This minimizes the impact of lost data and allows your firm to recover quickly from any cyberattacks.

Reputable CRM vendors, like Affinity, automatically save daily encrypted backups to keep data safe and secure. Affinity keeps these backups for 30 days and stores them redundantly across multiple availability zones to further prevent potential data loss. 

4. Get back to basics and strengthen your passwords

The power of modern technology means that passwords are the bare minimum when it comes to data security. But they still function as a strong line of defense against security breaches.

Yet, because passwords and credentials are often left in the hands of the end user, they’re a common culprit for cyberattacks. A recent study found that extremely simple passwords are used more frequently than we might think. Weak passwords continue to be a major point of vulnerability, with ‘123456’ alone responsible for 50 million breaches.

Passwords should be difficult to guess and shouldn’t be shared among teams or reused. Password managers can help generate complex passwords and help teams keep track of credentials. Changing passwords regularly and enabling multi-factor authentication also adds an extra layer of security. 

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5. Educate your team on cybersecurity

Sometimes all the security policies and certifications aren’t enough to offset human error. Cyberattacks are more sophisticated than ever and even some of the smartest people have fallen for clever phishing attacks.

Investing in cyber security education and data protection strategies is critical for keeping firm data safe. This includes the value of strong passwords, the importance of following policies, and how to identify potential security threats. 

VC firms need to adopt a culture of cybersecurity. Helping your team stay on top of best practices and knowing exactly what to look for pays off in the long run when it comes to securing your data and CRM.

6. Make use of access controls and permissions

As a general rule, there’s no need for blanket access to data within your CRM or tech stack. These types of widespread user permissions increase the potential access points for data attacks. 

Instead, provide access to software and data only to those who need it to perform their roles. For example, associates should only need access to data rooms and operational metrics for the portfolio companies in their pipeline. And admin staff likely don’t need access to deal pipelines. 

Quality CRM platforms should allow you to set different user roles and permissions, so every team member can do their jobs without unnecessary access. Review roles regularly and revoke user access for those who don’t need it. 

7. Monitor your CRM for suspicious activity

While some CRM data breaches fly under the radar, a lot of cyber attacks can be identified from unusual activity within your CRM. Keep an eye out for strange logins or data manipulations, extractions, and deletions.

Detecting suspicious behavior can help you spot potential threats in real time and act on them as quickly as possible. 

8. Conduct regular audits of your CRM data

Another way to protect your CRM data is by keeping it clean. While we often assume that more data is better, holding on to excessive or decaying data can increase your risk of data breaches. 

Take the time to routinely remove data that isn’t needed, such as outdated contact information or irrelevant deal data. Maintaining data hygiene not only improves dealmaker workflows but can also prevent unauthorized access to data that you didn’t need in the first place.

Protect your CRM data with enterprise-level security

In today’s world, CRM security isn’t a nice to have, it needs to be a top priority for VC firms in order to maintain trust with their stakeholders. Having robust security protocols in place doesn’t just protect your firm but your investors and portfolio companies. 

Affinity’s CRM software is made for relationship-driven industries—backed by enterprise-level security features designed to protect your firm’s data and stakeholder information. Holding certifications against the most stringent global standards, including ISO 27701, ISO 27001, ISO 27017, ISO 27018, SOC 2 Type 2, and GDPR, security is integrated into every feature at Affinity. 

From automated data capture to relationship intelligence, Affinity empowers dealmakers to find, manage, and close more deals with confidence knowing their data is secured to the highest level. 

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CRM Security FAQs

Why is data security important in a CRM?

Data security is important in a CRM due to the volume and nature of information it holds. With VC firms relying heavily on data to make deal decisions and conduct due diligence, the amount of information in a CRM makes it vulnerable to data and cyber threats. Lack of data security in a CRM can also:

• Erode portfolio company and investor trust.
• Put intellectual property at risk.
• Reduce regulatory compliance.

Adopting a CRM with enterprise-level security, like Affinity, can boost data security and reduce the risk of data breaches. 

What is meant by data security?

Data security means all the processes and policies in place to protect the data held by your organization. It includes the security policies related to hardware, software, and user access—anything that can impact data integrity.

What is the difference between cyber security and data security?

Data security refers to the protection of data itself, while cyber security focuses on protecting broader systems and digital infrastructure. Data security is generally considered a segment of cyber security.