The Virtual VC and the Need for Speed

From the very beginning, the coronavirus pandemic forced changes to business practices across every industry, from auto manufacturing to hospitality. Two years in and counting, the disruption to every aspect of our business and personal lives—from socializing and education to romance and finance—continues.

The venture capital industry has been no different.

Restrictions on in-person meetings and travel have dislocated the way VCs have always done business; as a result, the pandemic has catalyzed changes in how VC firms use technology of all kinds. Many of these shifts may well outlast the virus. 

Let’s look at some of the ways the pandemic has changed how VCs manage their network of business contacts and, more importantly, how VC firms can best use technology to continue—and even accelerate—effective dealmaking in our no-longer-so-new pandemic reality. 

In-person communication has gone digital. Digital communication has gotten personal.

Venture capital has always thrived on in-person interaction. Pre-pandemic, a typical VC might have attended hundreds of events a year, from small dinners to industry conferences. In March 2020, that number plunged to zero overnight, and while some of this activity has returned as the pandemic has worn on and the virus’s grip on us has roller-coastered up and down, much of the way we used to do business is still on hold. 

While some have tried to replicate it digitally, a Zoom happy hour isn’t as enjoyable—or productive—as cocktails in person. Instead, many began relying more and more on one-to-one communications by phone, text, email—and, yes, Zoom. 

Communication has become more focused (if less enjoyable)

If attributable only to Zoom fatigue, this increased reliance on one-to-one digital interactions means that conversations are often direct and to the point, perhaps centered on a specific question or agenda item. This is a contrast to in-person events, which tend toward being sprawling and open-ended. 

With the collapse of cultural norms that made in-person meetings essential for VC firms, other forms of communication have exploded. With email pouring into VCs’ inboxes like never before, the always-on expectation around communication has intensified to never-ever-off, adding a sense of urgency to deal-making. 

Making digital communication manageable

The shift to more targeted conversation conducted remotely means that dealmaking has become more compressed during the pandemic. This phenomenon has dovetailed with an underlying need to do business faster: the search for the elusive one-day close in an environment that rewards speed as much as savvy. On top of that, the decline in in-person events has reduced the amount of travel VCs and founders need to do, which has in some ways further streamlined the dealmaking process.

Fortunately, the compression of deal timelines and the reduction in dealmaking friction has been supported by digital tools in the VC tech stack that enable deal teams to move faster. So VC deals have sped up during the pandemic to a pace that some have referred to as “breakneck.”  

More data + more relationships = less focus? Not necessarily.

Those who have managed digital communications among dispersed stakeholders with the right technology have always had a leg up on the competition. With the rise in remote communications among stakeholders—and speedier processes across the board—VCs have an increased need to monitor their workflows, record their interactions, and leverage their networks efficiently.

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In short, they need to ensure effective relationship management amid the newly distanced, increasingly digital nature of their work. Just because meetings are on Zoom doesn’t mean VCs have an easier time keeping track of their business relationships—quite the opposite. In fact, with the proliferation of digital communications and video meetings, the flow of data that they must input into a CRM has turned from a river into a waterfall. Tools that can automate this process are essential in this new environment. 

Can your CRM keep up with you?

Much of the technology that VCs now need to thrive is already at their fingertips: email, text, video conferencing. They can continue to rely on the fundamentals of relationship-building required of a successful VC, even in an industry that now operates remotely more often than not. But to maintain the person-to-person connections that are the foundation of their most valuable deals, they need deal and relationship management technology that works the way they do. 

Relationship intelligence CRM platforms like Affinity are helping VCs remain competitive in the era of the one-day close. By automatically capturing  “data exhaust”—digital communications, calendar, and meeting details—teams can keep pace with their “breakneck” deals without having to manually update contact records. This information is then processed and presented as relationship intelligence—insights into the deal team’s collective network and business contacts that help them manage more contacts and find more deals.

As the speed of dealmaking increases, and speedier dealmaking becomes imperative, that kind of automation can mean the difference between closing or losing the deal. In an industry where relationships are the most valuable currency, Affinity makes it easier to track communications, make more of your business network, and maintain better connections that help you close deals.

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