Customer relationship management (CRM) software for venture capital (VC) firms is the foundation for how investment opportunities are found, managed, and won. By combining the firm’s complete relationship network with the ability to manage deals, VC CRM platforms can have a material impact on the performance of any fund or partner.
According to Gartner, CRM software is now the highest-grossing software market in the world. However, traditional CRM solutions are primarily designed for high-volume, transactional selling, not the sophisticated, relationship-driven deal-making of VCs.
What are the unique requirements of a CRM for venture capital?
A customer relationship management platform is designed to increase your effectiveness as a firm by helping automate, standardize, and optimize your dealmaking process. It also helps you make the most of your relationship network in a single platform that contains your most valuable data.
A venture capital CRM must meet some highly specific requirements to be effective, including:
- Supporting pipeline management: VCs maintain a pipeline of complex deals that differ from the transactional sales managed in traditional CRMs.
- Managing a complex network of relationships: Making the most of the firm’s relationship network helps to identify and progress investment deals through data enrichment.
- Automating the tracking of a high volume of interactions: A high degree of automation reduces the manual data entry and management required to capture the large volume of interactions that drive investment deals forward.
- Facilitating collaboration: Venture capital firms have to be able to easily communicate and manage the status of deals with general partners (GPs), limited partners (LPs), start-up founders, and other stakeholders.
- Ensuring adoption: A great user experience ensures that every member of a firm adopts the CRM as their system of record, replacing the manual notes, spreadsheets, and email-based workflows that many use today.
- Integrating with other software: There are many moving parts in a venture capital firm that require various software solutions. A CRM that integrates through APIs or integrations is essential to creating an easy-to-use, interconnected system.
These requirements call for a CRM that builds on the core capabilities of managing deals as well as interacting with—and creating contact records for—people and organizations. This requires technologies that provide:
- High levels of automation for efficiency.
- Relationship intelligence insights for additional context.
- Easy collaboration for team-wide adoption and visibility.
- In-depth analysis of deal pipelines and activity for optimization.
- Customizable options to ensure you can meet your firm’s needs.
Let’s explore the advantages of having a CRM built for the unique workflows of venture capital in more detail, starting with the most valuable data that you should be tracking in your CRM.
How a CRM system for venture capital supports your deal workflows
As mentioned above, a venture capitalist’s CRM is more than just a place to store names, phone numbers, and email addresses. It's a centralized platform for your entire firm's deal flow pipeline—including every person, organization, and opportunity. Based on our experience working with thousands of VCs, here are some insights on how the best firms use their CRM software for deal and network management.
Deal flow data management
A survey conducted by Blue Future Partners found that the biggest reason a VC firm may evaluate a new tool for their team is to improve their ability to find and close deals (59%), so how can a VC meet this need with a CRM?
Creating, tracking, and managing deals
Tracking deals from pitch to close can be a complex process, especially if the data is stored in multiple locations like spreadsheets, email, note-taking tools, etc. Many firms review thousands of opportunities per year and invest in fewer than 1% of them. A venture capital CRM gives your team the ability to monitor all activity related to every deal at both a micro and macro level.
There are three key reasons that VCs get the most from managing their deals in a CRM:
- The ability to instantly see all the deals they are working on in a single view, with the option to drill down to see all the details on each of them.
- The ability to show, communicate, and manage those deals visually.
- Every status and communication related to each deal is automatically captured and enriches the deal record.
For VCs managing many deals, it’s critical to have multiple ways to view them. A list view offers a comprehensive perspective of the most important details of a full deal pipeline. Customizing this view, including specific data columns, provides insight into relevant industries, reasons that you may have passed on a deal, or a prioritization system so you can flag your most valuable opportunities.
Meanwhile, Kanban-style board views provide a macro perspective of the deal pipeline itself, showing each deal in the standardized pipeline stage used by your firm. This provides the opportunity for the team, GP, and even LPs to review the deal pipeline and instantly update statuses.
Standardizing your deal flow pipeline
With your relevant data automatically logged in one place and everyone relying on a single platform, you can build reliable, standardized systems and repeatable processes. Repeatable processes turn to repeatable successes and create a strong foundation for your firm to scale. In “Break the Bad Data Habit,” Harvard Business Review says that “there are two interesting moments in the lifetime of a piece of data: the moment it is created and the moment it is used.”
There are two interesting moments in the lifetime of a piece of data: the moment it is created and the moment it is used. (Harvard Business Review, 2012)
By relying on a CRM tool that automates data capture, you can be sure the moment data is created is accurate. From deal sourcing to due diligence, creating standardized processes with your data ensures it’s also accurate when it’s put to use. In contrast, teams that rely on spreadsheets or manual CRMs often end up with unorganized data.
Keeping opportunity data organized can include custom fields—such as listing the other firms involved in the investment or deal stages unique to specific industries you serve. The scope and detail of the fields should be customized to your firm's workflows. Automated data updates to related fields can ensure that multiple team members are not engaging the same opportunity, or working an opportunity that was passed on but not properly documented.
For each of those thousands of opportunities managed by a VC firm, there are exponentially more people and organizations connected to them. Let’s take a look at how CRMs help you manage this extensive relationship network.
Relationship and network management
In addition to managing your deal flow pipeline, a CRM designed for VCs must take into account the relationship-driven nature of dealmaking. The thousands of companies, names, email addresses, and phone numbers that connect you to individuals in your network are currency for your team.
Each member of your team is in touch with founders (for both existing portcos and potential investments), other investors, LPs, and a wide range of other consultants that they’ve amassed throughout their career—and these all need to be nurtured over time. Your relationships with specific companies won’t be as personal as relationships with the people in your network but your CRM should still provide a flexible ecosystem that can manage both the overlapping and unique attributes of either.
People data management
Traditional CRM platforms are, at their core, built for contact management. However, when each team member manually enters and maintains their own data their way, these same platforms can quickly become bloated and filled with dirty data.
A venture capital CRM goes beyond storing contact records mapped to accounts and turns them into a network asset that makes it easier to use the data you have to take action. Automated data entry and enriched data sets provide greater context around existing connections, and syncing this data across the team opens the door for new connections, relationships, and, eventually, opportunities.
And contact information is not the only aspect of people management. A VC’s CRM software should provide as much context as possible and include a wide range of data relevant to an individual, including:
- Any meetings your team has had with that contact.
- Last date of contact.
- Related companies.
- Related opportunities.
- Their relationship (both long- and short-term) with other contacts in your network.
- Other relevant custom notes (e.g. where an initial introduction was made, family status, hobbies, etc.).
This valuable data can easily go missing when every call or contact isn’t automatically logged. Unique privacy tools built into venture capital CRMs also give you the ability to keep select data private when necessary.
Most importantly, consolidating everything in a CRM means there’s never a gap in institutional knowledge if one of your team members moves on to another organization. You must also capture this data in ways that align with your organization’s specific security and confidentiality requirements. For example, GP email communication with LPs can be logged for transparency, but the contents of the communication do not have to be shared with teammates.
As you enter more and more data on individuals, it’s equally important to use your CRM to track company-level data.
Organization data management
When you find a potential investment opportunity, there are countless variables that affect whether or not you choose to invest. On one hand, your ability to work well with the founders of a company is a cornerstone of an investment, but you’ll also need to track all of the information relevant to the company itself.
With a CRM, you can easily tie all relevant contacts back to a single organization while also tracking all of the intelligence about that current or potential investment target at the organization level. A venture capital CRM should work with your team to improve your existing organization-level data in the same way it does with people. Organization-level information can include:
- Past fundraising.
- Current funding round.
- Revenue.
- Total employees.
- Industry.
- Founding year.
- Source of introduction to the company.
- Contacts at the organization or otherwise related to it.
- Opportunities with the organization.
Even if you’ve previously passed on the organization, retaining a consistent record in your CRM means that if you revisit the deal later, there is a thorough record of your contact history with the company.
For example, a note or meeting transcript may reveal that you passed on a deal because the founders did not have industry experience. A few months later, as they approached Series C, they brought on an industry expert as their COO and their team continued to grow. Now, you can get ahead of the competition because you already have an inroad and a record of all of their relevant information and your history with the company.
Managing people and organizations in a single place removes communication barriers and eliminates the chance of overlapping work with your team by providing real-time updates and context. But what is the point of that data if you aren’t using it to meet your business goals?
Let’s dive into how you can utilize your CRM to drive success.
Key requirements for successful CRM deployment
If venture capital CRM software is all about improving existing workflows, it’s important to take a step beyond how the data in your CRM makes deal management and network management easier. Next we’re going to reflect on what technologies are available that enable your success and support making improvements to your team’s performance and processes.
Venture capital CRMs are unique in how they support business development:
- Automated data management surfaces your historical communication activity for all of your contacts and continually updates that deal and relationship data.
- While the CRM handles data entry, you can focus on standardizing workflows for deal and relationship management.
- Consistency in your process leads to improved visibility and collaboration across your team, which ultimately leads to better investment decisions.
- Built-in data visualization tools allow you to identify your best deal sourcing activities, pipeline performance, and monitor portfolio companies, empowering you to analyze and optimize your processes even further.
Let’s take a more in-depth look at how to effectively maintain quality information, gain new insights, and turn those insights into action with your new CRM.
Automation
Your CRM is only as valuable as the data you add to it. Forgetting to log a call or email today can easily lead to another member of your team reaching out to a prospect that you’ve already spoken to. You’ll use more of your team’s time and leave the prospect with the impression that your firm is unorganized. Automated data entry streamlines the process and ensures that your data is clean and current so you can focus on driving deals.
Automating data entry by ingesting engagement activity such as emails, attachments, and calendar events can save your team an average of 188 hours per year and ensure the right steps are taken as your deals progress. This includes retroactively surfaced interactions going back to the beginning of your inboxes, so even historical information is accounted for in decisions made tomorrow.
Manually entering and maintaining data in Excel spreadsheets or other bulkier CRMs creates inefficient systems that can go unused. When you account for labor costs associated with redoing work due to human error, workflow automation saves teams time and money by decreasing error rates by 70%.
With all of your team’s network data together in one place automatically, you can rely on relationship intelligence tools to augment and enrich your existing data as your database grows.
Relationship intelligence
Relationship intelligence tools offer new insights that lead to new connections in your team’s shared network. AI-driven algorithms measure relationship quality and can lead to warmer introductions, while data enrichment provides additional context around people and organizations.
Relationship scoring takes the guesswork out of outreach by quantifying just how well you know contacts in your network. These values are generated based on previous interactions and mutual connections. Sourcing based on actionable data points is much easier than sending out cold email after cold email, and team members can source new leads spread across your firm’s collective network rather than being limited to their own contacts.
Automatic data enrichment fills in key data points at both the person and organization levels. For example, it will auto-populate data like job title and industry for your people lists. It will also fill in fields like location, industry, current funding amount, and AUM (assets under management) at the organization level without your team ever having to ask.
While a CRM can’t replace your team’s networking and outreach tools, using a unified system that manages and supplements that network with the right technology increases collaboration and effectiveness.
Collaboration
Standardizing your data entry processes opens the door to a more collaborative, open team environment. Partners and associates at your firm can more frequently work deals together by sharing a single contact record. Automatic data entry and updates guarantee cross-team adoption so no data ends up isolated in a distant spreadsheet somewhere.
You can take this collaboration a step further by integrating your venture capital CRM software with other tools you already rely on. Via integrations and APIs, here are a few ways your CRM can work with your existing suite of programs:
- Push an update from your CRM to your firm’s collaboration tools, such as Slack or Microsoft Teams.
- Sync your CRM files with your cloud storage.
- Enroll contacts from your CRM into relevant mailing lists in your bulk email tool.
When your team is on the move, mobile apps can further increase collaboration. Being able to review profiles, interaction history, and notes before meetings, and then create or update notes and change deals right after a meeting keeps deals moving forward.
Once these processes are in place, you can also visualize your firm’s collective data to more clearly review your entire network and deal flow processes.
Combining this data with analytics tools, like Affinity Analytics, allows you to easily review your pipeline and identify areas for improvement.
In our next section, we’ll dive deeper into analyzing and optimizing the processes outlined so far based on your unique measures of success.
Analytics
By visualizing your deal data and relationship data, you can more easily identify and evaluate patterns in your deal flow pipeline. There are three major opportunities for VCs to use CRM data to analyze processes and drive improvements in investing activity:
- GP and management-level inspection of fund-level deal pipeline and activity.
- Individual partner and associate activity review for both deal pipeline status and activity KPIs.
- Firm-level reporting for external stakeholders such as LPs.
Since these analytics dashboards are directly integrated into your CRM you can do away with having to export and manually manipulate data. This functionality allows you to understand the complete picture of your deal flow pipeline and how you’re progressing toward your goals. With this view of your data, you can create a consistent cycle of improvement by iterating on and scaling systems that help you close deals.
Below, you can see two key charts to review deals using the source metric (both by state and by sector), so you can determine and reflect on where your deals are coming from.
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Gaining a clearer understanding of which deals aren’t moving forward and understanding why means you can deploy capital faster, invest in the best opportunities in your pipeline, and repeat.
The power of a CRM for venture capital
Relationship and deal data management seem straightforward: keep track of contact information, follow up on your prospects, and close deals.
The reality is that maintaining your team’s vast network of contacts and opportunities can quickly become unruly without clear alignment around consistent, efficient processes. Generally, CRMs are powerful data management tools, but venture capital CRMs are also designed to simplify and optimize your investment management process.
When you have clean, automatically logged deal and relationship records available, you can utilize your team’s collective data to make more informed business decisions. These decisions impact both internal processes and external deal and relationship management, culminating in scaling and improving as a unit so that you can close more quality deals faster.
More and more VCs are recognizing the importance of a CRM designed for their unique use case, like Affinity.
With Affinity, your team can save 200+ hours of manual data entry and updates per year by simply connecting Outlook, Gmail, or your email provider and having the CRM capture all interactions so you can quickly and confidently move deals forward.
Affinity automatically captures relationship insights so you can not only manage your network directly in your CRM, but also find the fastest path to a warm introduction that can help you find, manage, and close high quality deals. Request a demo today.
Is your team already using Salesforce? Get all the benefits of Affinity’s relationship intelligence and insights without switching CRMs using Affinity for Salesforce.
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Venture capital CRM FAQs
What is a CRM in venture capital?
In venture capital, a CRM is a system that supports firms through every part of the investment lifecycle and uses AI to improve investor relationships. CRMs built specifically for investment banking, venture capital, private equity, commercial real estate, and other capital markets firms take into account the specific needs of these industries. They’re equipped to help with deal flow, relationship, and portfolio management.
What is investor relationship management software?
Investor relationship management software (IRM) is another name for CRM. It refers to software that helps investors track and manage all their interactions in a system that serves as their single source of truth to track the deal flow pipeline and manage investor relations.
Is Salesforce the only CRM for VCs? What is the best CRM for VCs?
While one of the most well known CRMs, Salesforce is not the only CRM for VCs. There are other CRMs that are designed to work specifically for the unique needs of VC firms like Affinity and Pipedrive. If you’re a VC already using Salesforce, Affinity for Salesforce allows you tap into relationship intelligence in the CRM you’re already using.
What is the best CRM for VCs?
Designed specifically for the venture capital market, Affinity is a CRM that caters to the specific needs of VC firms. It brings together relationship intelligence, deal sourcing, deal flow management, portfolio support, fundraising, and analytics that integrate directly with how you work.
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