The ultimate buyers guide to CRM for venture capital

Implementing Customer Relationship Management (CRM) software should streamline how you and your team manage relationships and deals. But if they’re meant to make your life easier, why do up to 70% of CRM implementations fail?

The easy answer is that if a new CRM software doesn’t match up to a business’s needs or improve on existing processes, it ends up being a large, costly endeavor. When you buy the wrong CRM, you either end up with a platform that doesn’t do what you need it to do, or you scrap it and start the process over again.

In this guide, we’ll walk through everything you need to know to find a CRM built for venture capital, ask questions to identify what you and your firm need from a CRM, and discuss how choosing the right technology is a competitive advantage in an extremely competitive market so you can get the right venture capital CRM for your team.

{{guide-202310="/rt-components"}}

What is a CRM for venture capital?

Customer Relationship Management (CRM) platforms are built to manage relationships and interactions with customers and prospects across an organization. Your venture capital firm—and every investor on your team—is defined by the relationships shared across its network. These complex relationships are different from traditional, transactional sales relationships and have to be nurtured and maintained over long periods of time.

A CRM built for venture capital is more than just another tool in your tech stack, it’s the foundation for every deal that your firm manages—from an introduction to pitch to close.

Why deploy a CRM and how do you know if you’re ready?

A properly utilized CRM will change how your firm operates by improving your existing processes. This change only works if the organization is prepared, so how do you know when to make the change, and how do you choose the right CRM? Start by asking yourself about your firm’s current pain points surrounding deal management and relationship data.

1. Where is my team storing data? Is the firm using a centralized system or are they tracking relationships and deals across isolated spreadsheets on their personal computers? Centralization is a key step toward unifying your team.
2. How is my team managing the volume of data entry? It’s important to understand how often your team is updating its records. Are customer profiles and deal pipelines current, or are there gaps?
3. How is my team collaborating? Are they communicating with each other about the deals they’re pursuing? How are they finding new introductions or sharing contacts?
4. Does my current system of record meet our expectations? Is your current solution designed to support venture capital investing? The ideal system should maintain a balance between being easy to use and sophisticated enough to provide more than just a place to store data.

These questions can help you identify places you can improve on existing processes with the right technology, but the only way to know definitively if you’re ready to buy a CRM is to perform a full cost-benefit analysis of the system’s ROI.

Cost-benefit analysis

“How much is my CRM going to cost?” The short answer is that adopting the right CRM is a cost-saving initiative. Using our qualitative questions above as a guide, we can figure out some key questions for you to use in your cost-benefit analysis. It’s important to review both the immediate and lifetime costs of the CRM as well as both tangible and intangible benefits of implementing the software.

What are the immediate costs of a CRM?

• The platform: The sticker price of each software will vary, but keep in mind that an increased monthly cost could be tired to key product features that save you money down the line.
• Implementation: This is the collective cost of starting up, including engineering resources, data migration costs, platform customization time, training, and process changes to get your team started on a CRM.

What are the lifetime costs?

• Ongoing training: Your team will be trained when you deploy the CRM, but there is also an ongoing cost of training new hires as your team grows.
• Customer support: Tiered support options give you the flexibility to choose a level of support that matches your needs.

What are the tangible benefits?

• Streamlined deal flow: A new VC CRM should improve the quality and quantity of deals in your team’s pipeline—from warm introductions to closed deals.
• Increased adoption: Your team should be actively using your CRM. A consolidated system helps them trust the data available to them and make more informed decisions quickly.
• Saved time: Our research has found that a CRM can save up to 188 hours per person per year. Multiply that by your hourly cost of labor to get a starting estimate for expected time savings.

What are the intangible benefits?

• Improved user experience: Your CRM needs to be as easy or easier to use and more flexible for day-to-day data management, pipeline management, and reporting than your previous solution.
• Heightened security: If relationships are a VC’s most valuable asset, keeping that proprietary network safe is essential. Modern data security and privacy help protect your proprietary information in a hyper-competitive environment.

With these top of mind, it’s time to turn to the differences between a VC CRM and a traditional sales CRM and the technologies that you’ll need in a venture capital CRM.

What you should be aware of with a CRM for VC

Not all CRM platforms are built equal. As a VC, your needs will differ from those of traditional sales organizations. Traditional solutions aren’t designed for managing the complex, long-term relationships integral to investing and go easily go unused.

Having a CRM that manages deals rather than traditional sales, encourages adoption across your team, and saves your firm time are not just tangible benefits of a venture capital CRM; the software helps make improvements to the underlying strategies that are vital to becoming a world-class VC firm.

Managing sales vs. managing deals

Traditional CRM solutions are designed for transactional selling, but venture capital investment deals follow a different trajectory. Deal management involves sophisticated, relationship-driven deal-making processes.

Tracking a deal funnel and tracking a sales funnel may appear similar, but the processes couldn't be more different.

Choosing to invest in a new opportunity isn’t a purchase, it requires a belief in (and commitment to) an organization and a personal connection to the company’s founders. Nurturing ongoing relationships is just as important as evaluating new deals, and having a toolset that supports this change is a requirement.

Encouraging adoption

Traditional CRM platforms that require manual data management more closely resemble an empty warehouse than a robust, living source of truth. This hollowness leads to low adoption rates which leads to a low-value system with incomplete records, and a low-value system leads to even lower adoption rates.

Venture capital CRM software is built with a focus on improving deal flow but not just through deal management. Sharing a single platform that consolidates all of your firm's contacts, automates activity tracking, and is easy to customize encourages every member of the team to use it.

Saving time

By automating manual data entry and providing built-in analytics and reporting, everyone at your firm can spend more time interacting with clients and working deals and less time manually manipulating data.

Why Affinity can make a difference for your team

Our team has met with thousands of VCs around the world, and we consistently hear that their business needs aren’t being met by their current CRM. Affinity is built to integrate directly with your most important workflows as a VC. Our venture capital CRM is as lightweight and easy to use as a spreadsheet and as sophisticated and robust as a large-scale CRM platform.

Automated relationship intelligence algorithms ingest a complete historical record of your firm’s interactions, automate your data entry and data management, and provide detailed relationship scoring to provide greater insight into your most valuable relationships. With Affinity, you can show up smarter to every meeting and close more deals faster.

{{request-demo="/rt-components"}}

How does CRM technology map to your organization’s needs?

Customer Relationship Management is more than just software that stores relationship data. Your relationship management strategy is a core part of your investment strategy. In order to effectively manage both your relationship data and your relationships themselves, you need a CRM that supports key parts of your business and has the right technology built into the platform.

Business requirements

Before you decide on a CRM, it’s important to understand the key business requirements that a CRM can help address. Use this section as a checklist for how your firm will use a CRM.

Deal management

A CRM optimized for the VC deal process should provide a complete, end-to-end overview of your deal management pipeline. This includes a variety of ways for you to view, organize, and share your pipeline information, so you have a comprehensive overview of every deal at every stage in the process.

Kanban board views offer a new way to visualize and manage your deal pipeline.

Affinity offers the ability to instantly see all the deals your team is working on in a single view—in a list, a Kanban board, or a full analytics dashboard—that you can refer to and dive more deeply into as needed. Custom views allow you to filter by deal stage or by sourcing KPIs so you can understand every detail of your most valuable deals.

Automated activity tracking

It’s challenging to remember every call you made or email you sent in a day, let alone being aware of what everyone else at your firm is doing. Automated activity tracking ensures that you have a record of every email, every call, and every meeting anyone on your team has with a contact.

“Affinity enables us to move fast in the same direction without stepping over each other.”

This means you can collaborate on deals without repeating work or potentially damaging your firm’s reputation by having multiple team members working a single opportunity. Burke Davis, Vice President of Sorenson Capital, chose Affinity for his team’s CRM and now it’s “a daily tool that is ingrained in our workflow. It enables us to move fast in the same direction without stepping over each other.”

A venture capital CRM provides clearly visualized activity timelines that outline exactly who reached out to a connection and when, so anyone can easily pick up the conversation where it left off.

{{guide-202310="/rt-components"}}

Relationship intelligence

Relationship intelligence algorithms provide unique insights into your team’s collective network that take the guesswork out of your outreach efforts. You can source new deals based on actionable data, like quantified relationship strength, and find new introduction paths to contacts that would otherwise be hidden away in individual spreadsheets.

Data enrichment further expands your team’s knowledge by providing additional data from 3rd-party partners, providing more context for every relationship in your CRM. “Affinity makes you a smarter, more organized networker. For me, that means I’m better at what I do,” says Kyle Lui, Principal at DCM Ventures.

Green text fields are columns that are automatically enriched and populated by Affinity.

Affinity’s relationship intelligence algorithms and data enrichment support your existing records automatically, so you have the information you need for every deal at your fingertips.

Contact management

Managing the sheer volume of relationship data that VCs juggle means that hundreds of emails and calls become hundreds of hours of manual data entry. The most popular reason teams implement a CRM (28.74%) is to increase efficiency, but traditional CRMs become a hindrance to productivity if your team has to manage their records manually.

If each team member takes 30 minutes of their day to create new records, update email addresses, and fill out other essential data, they can spend up to 188 hours per year on data entry alone. Shannon Potts with Pemba Capital Partners automated “the logging of contact details, emails, and meetings” and “saved us so much time in an administrative sense” with a VC-driven platform.

Automatically capture job titles, alternate emails, and phone numbers for individual contact directly from prior communications.

A venture capital CRM like Affinity automates contact management by creating new profiles directly from calendar appointments and email threads so teams can focus on deal management instead of data entry.

Analytics

Analytics must be built into your automated, relationship intelligence platform so you can guarantee that all of the data you’re reporting on is up-to-date and accurate. 42% of executives say they are not confident in their ability to easily find internal and external data when they need it. Your team shouldn’t waste time building reports with day-old data.

A sample Affinity Analytics dashboard tracking active deal count/amount, average value by vertical, top 10 active deals by size, and active deals by vertical.

A VC CRM with embedded reporting and analytics empowers you to make quicker, data-based decisions with live reports. Custom-built reporting dashboards update automatically, so you can set, track, and visualize your team’s KPIs. When your Monday morning meeting comes around, you can uncover previously hidden data patterns together and optimize your deal flow.

Flexibility and customization

Traditional CRMs, especially large-scale enterprise suites, rely on multi-person implementation teams to build additional fields for new types of data. No two investment processes are identical, and being able to add or alter columns on the fly is a necessity. With more rigid, traditional CRM systems, this process can be cumbersome at best and impossible at worst.

A VC-driven CRM will give you the flexibility to create new fields like“Deal Priority” on your own time to help manage your deal flow.

Being able to customize workflows or adjust contacts records to prioritize new fields without needing to wait for a 3rd-party gives your team the ability to make changes that support new strategies or areas of focus. A VC CRM like Affinity enables your team to move at their own pace by allowing them to build custom, easily shared fields, lists, and dashboards as needed.

Platform requirements

Differences in platform-specific features will further refine your ability to choose between just any CRM option and a venture capital CRM built for your team.

User experience

“Will my team use a CRM?” In the traditional CRM market, the answer to this question is often a resounding “no”. In fact, 83% of senior executives explained that their biggest challenge was getting their staff to use the software.

If the software itself is intuitive, it will be much easier to get your team to use it. Improved flexibility allows you to manage your own changes and updates as needed, and additional accessibility tools—like a mobile app—can make modern VC CRMs something that teams want to use. According to Ben Blumenrose, Co-Director of Designer Fund, Affinity is “the perfect blend of great product design, feature-richness, and workflow integration” because it “takes the best parts of RelateIQ and significantly improves them.”

Choosing an intuitive system that your team can use easily shouldn’t be a trade-off for sophisticated features like it is when choosing between spreadsheets and traditional CRM.

Automation

When dealing with a high volume of deals and relationships, human error becomes a costly issue. Research by the MIT Sloan Management Review estimates the cost of bad data to be 15% to 25% of revenue for most companies. For your VC firm, dirty data can lead to team members not being aligned, doing overlapping work, damaging your firm’s brand, and ultimately losing deals if accounts are not carefully monitored and updated regularly.

“...the cost of bad data is 15% to 25% of revenue for most companies (MIT Sloan Management Review, 2017).”

When your firm is managing hundreds of deals, involving thousands of connections, tracking relationship and deal data is essential to success. Tracking it manually shouldn’t be. Venture capital CRM software automatically updates your contact and deal records to keep track of your important data so you don’t have to.

Deployment

A CRM for venture capital should make deployment simple so your firm can get started quickly and keep your deal pipeline in motion. The timeline from purchase to deployment will vary based on the size of your organization, the volume of data in your existing system of record, and the capabilities of your CRM vendor.

The average CRM implementation period is approximately ninety days, but this number will vary depending on the amount of customization required and how easy the CRM is to customize.

Some CRM platforms—like DealCloud—require long-term implementation partners during the initial design because their systems are rigid. Managing these implementation teams becomes another factor in the process, and project management of this launch can have a significant impact on deployment time.

Affinity is able to extract historical data from your existing system so you can be up and running on your new CRM in 72 hours.

Support

Even if you’re managing most of your CRM changes independently, the right service and support options give your team the power to handle any potential problems.

The level of service required post-implementation is contingent on your answers to previous questions about usability and flexibility. Different CRMs, even among venture capital-specific CRMs, will offer different service options. Some may only offer an FAQ page or a ticketing system. More active support teams can:

• Help with urgent questions through live chat
• Provide best practices and insights based on their industry expertise
• Assist in building and tracking your team’s KPIs

For example, Affinity’s support options aggregate knowledge from our hundreds of venture capital firms and help our users apply industry best practices wherever possible.

Security and privacy

A CRM for venture capital needs both enterprise-grade security and adjustable internal privacy settings. Communication transparency enables new ways for your team to collaborate, but not every member needs to see every detail.

VC-oriented privacy settings give administrators the ability to change visibility into specific events that have been automatically logged in the system—like protecting specific details of a meeting with an LP, while still recording that a meeting happened.

Keep your communication details private without missing out on important contact history.

As the market for both non-traditional investors and larger firms grows more competitive, being able to collaborate on proprietary deals while maintaining privacy and confidentiality is invaluable. Choose a CRM that keeps your deal data safe.

Integrations

Ensure that your CRM meshes well with your existing tech stack. For example, your team may rely heavily on Outlook for managing your emails. A VC CRM like Affinity gives you the ability to add individuals on an email thread to a specific list in your CRM or add a note about a conversation without leaving your inbox.

Microsoft Teams, Slack, Dropbox, Google Drive, and Mailchimp are just a few common tools in the investor tech stack that integrate directly with Affinity.

This goes beyond just software integrations. Relationship intelligence is a requirement for your business, and the right venture capital CRM will offer integrations with top, 3rd-party data providers. Easy access to person and organization data from outside of your team’s network can provide new leads and fill in gaps in your team’s information.

Choosing a CRM that grows with your team

As you get to the end of your evaluation checklist, if your requirements and expectations have been met, and you’re ready to make a change, make sure that your new venture capital CRM can grow with your team long-term. If your existing relationship management strategy doesn’t support your workflows today, don't launch into another broken system.

Build a better venture capital firm supported by a modern CRM that automates your data management, enhances your team with relationship intelligence, and optimizes your most important workflows. Show up smarter and close more deals faster with a CRM built for venture capital.

{{request-demo-c="/rt-components"}}