Why a CRM is essential for investor relationship management

Building quality relationships with limited partners is a necessary function for a successful venture capital firm. While every GP-LP relationship is different, one thing that remains constant is the need for tools that support relationship management. Investor relationship management software is a requirement for firms interested in growing their team and their investment portfolio. Let’s take a look at why you need investor relationship management software and how you can use a CRM to support your investor relations.

What is investor relationship management software?

Investor relationship management software for private capital and venture capital teams covers a wide range of technologies that investment teams use to build and support investor relations (IR). Effective IR software for fast-moving investment teams needs to be designed to track prospects and contacts throughout your deal pipeline as well as function as a source of truth for all of the relationship network data.

How do you use a CRM for investor relations?

A venture capital customer relationship management (CRM) platform is an invaluable piece of your investor relationship management strategy. Your CRM provides a simplified, user-friendly process for quickly and accurately reporting on your activity, deal pipeline, and your engagement with prospective founders. 

Concisely share valuable insights into your deal flow pipeline with existing LPs and use those same reports to tell a comprehensive story about your team’s successes to prospective investors. Having an end-to-end relationship management platform can be especially impactful for smaller investment teams or family offices that don’t have a dedicated IR team; they can instead rely on a platform that supports them.

Why a CRM is essential for your investor relations management strategy

 A venture capital CRM not only provides a way to automate contact management, improve collaboration with your important stakeholders, and streamline current deal workflows, it can also serve as the foundational technology for your investor relationship management strategy. The most important reasons your team needs a CRM for investor relations are:

1. Providing visibility into your deal flow pipeline
2. Supporting existing LP relationship management
3. Building relationships with new LPs
4. Tracking fundraising rounds

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Providing visibility into your deal flow pipeline

Your CRM platform is already a central repository for all of your important deal information and supports the high-volume, relationship-driven nature of investing. With that data already on hand, you can easily showcase:

1. The scope of your existing deal pipeline
2. The status of current deals
3. The expected outcomes from your current funnel 

Built-in, real-time analytics allow you to consolidate your deal pipeline into easily digestible reports. Work with your LPs to build reporting dashboards that directly address the data that they find impactful.

Deal Funnel reports offer a comprehensive overview of your deal flow pipeline at a glance.

Providing consistent updates that cover the data your LPs care about helps your team tell a consistent story centered on how you’re delivering value, helping your partnerships prosper, and reinforce your reputation as a partner that meets—and exceeds—their expectations. 

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Supporting existing LP relationship management

Your current LPs already have a vested interest in your team’s success. You have the data and the toolset to keep them up to date on your most important deals, and this is a great start to supporting the relationship. 

Much like your connections to founders, your connection to your investors is a sophisticated, long-term relationship, not a simple, transactional interaction. Sharing deal pipeline data alone might help you get ahead of the competition, but it won't keep you there.

A vital piece of your investor relationship management process has to be actually engaging with your relationships. Here are two ways you can utilize your venture capital CRM to support that process.

Tracking communications

Automated activity tracking means every interaction your team has with an LP is recorded in a single place. This key function of a VC CRM not only includes direct communications like emails, meetings, and phone calls, it also gives you a place to attach files directly to a contact record so you know what you shared and when. 

Activity timelines consolidate all of your interactions into a single view of your relationship history.

Having a single record also means your team can remain aligned on goals established with your LPs. With team-wide communications logged together, you can review what information was shared in a previous meeting and ensure there is a direct continuity between calls. Telling a consistent story establishes trust between you and your LPs by reassuring them that you can set and stick to the plans you create together.

Prompting follow-ups

Investor relations management tools also support an active approach to building stronger business partnerships. With built-in reminders, you can set a regular cadence to follow up on a previous interaction so you can keep your connection warm. Even if you don’t have overwhelmingly positive (or negative) news to share, providing regular updates must be a core part of your IR strategy so you can remain top of mind.

Building relationships with new LPs

Connecting with new LPs and building new relationships with them helps your firm grow, but you can't rely on developing these important relationships from cold emails or phone calls. A CRM supported by relationship intelligence technology can get your foot in the door, so you can further leverage your existing data and prove your team is worth the investment.

Creating warm introductions

A venture capital CRM takes the guesswork out of finding new paths to warm introductions. Relationship intelligence algorithms provide your team with deeper insight into their collective network and eliminate the need to ask questions like “do we have any connections to this team?” or “who is the best person at our firm to reach out to this contact?” Now, your potential connections aren’t just limited to your GP’s rolodex, you can find ties to anyone on your team.

Relationship intelligence algorithms help you find paths to new connections within your existing network.

You can source new connections to potential LPs based on actionable data in your CRM—like relationship strength scores that quantify just how well you know someone. These insights also help uncover new introduction paths that would otherwise remain hidden in Excel spreadsheets or email inboxes. 

Additionally, the right investor relationship management solution will be enriched by 3rd-party data sets that build on your team's existing library of information. For investment teams, partners like Pitchbook and Crunchbase integrate directly with CRM platforms like Affinity so your investor profiles and organization data are always up to date, and you can show up smarter to your next call. 

Demonstrating value

We briefly touched on how an investor relations CRM platform with analytics functionality directly supports deal flow management and sharing data with current investors. Analytics and reporting also provide a way to showcase your experience and value to prospective investors. 

Analytics dashboards provide your investor relations team with an easy way to share your current and historical deal data. In much the same way that you can show your current funnel of current investors, proving to potential investors that your team can adhere to a plan and meet investment goals will improve the likelihood of converting that LP into an investor in your fund.

Tracking fundraising

CRM software built for private equity and venture capital teams is designed with deal flow management at the forefront. Best-in-class CRM solutions are flexible enough to turn investment deal flow management tools into fundraising management tools. By automatically tracking all of your contact information and deal data related to your LPs in one platform, you can track and manage your firm's funding rounds and the most important details about the relationship together.

Much like tracking potential investment opportunities for your team, you can leverage opportunity lists in your CRM to monitor specific funds as they move through specific deal stages—from First Meeting to Due Diligence and through to Closed/Won. 

Kanban board views make it easy to drag and drop deals into different stages so your team can visually track prospective investors as they move through the evaluation process.

Custom columns also give your IR team the ability to categorize LPs based on criteria that matter to you (like industry or previous funding amounts) and track key notes (like specific fundraising processes they adhere to).

Utilizing opportunity-specific lists in your CRM gives you the ability to focus on the information directly relevant to the current round of fundraising. By monitoring these fundraising processes in your CRM you can link current deal data to your entire communication history, so you can manage them separately but surface more detail with the click of a button.

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How to choose a CRM that supports investor relations

Your team needs one investor relations platform that supports building a full investor relations strategy. A CRM for venture capital provides clear visibility into your deal flow pipeline, helps support existing LP relationships, build new relationships, and track fundraising alongside it all. Traditional CRM software helps facilitate quick, transactional sales, but these platforms lack the technologies necessary to build the rapidly evolving, relationship-driven networks required for investor relations. 

In order for your firm to routinely secure funding and remain competitive as more and more firms begin to compete for investment dollars, you have to consolidate and streamline your process for managing relationships with your limited partners.

Choosing a CRM that relies on automation and relationship intelligence reduces cold outreach while alleviating manual activity tracking and reporting. This gives your team the freedom to focus on the high-impact work that matters: actively supporting the investor relationships that drive your business.

With new features and an improved mobile-first UI, Affinity mobile enables your team to more efficiently collaborate and build lasting relationships from anywhere.

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