As a general partner (GP) or limited partner (LP), you need to manage your venture and investment prospects effectively. In an effort to move deals along more quickly, and with so many single-use dealmaker tools and generic management solutions available, you may be tempted to invest in one or more of these solutions without conducting much product research first. Although this may seem like a quick fix, it also comes with numerous risks.
For example, you might decide to manage your contact information within your email by downloading a plug-in that adds basic customer and prospect information. This would allow you to determine when you last talked to someone, how frequently you’ve talked to them, and even your sentiments about the lead. At first, this plug-in might work well for you and your dealmaking team — but what would happen if that plug-in was discontinued during your busiest season? You’d lose all the information you’d collected regarding your current prospects.
Dealmakers need tools they can rely on, not ones that are outdated or soon to be obsolete. By using a solution purpose-built for the financial industry — rather than a plethora of mismatched, unsecured tools — dealmakers can improve the reliability of their technology.
Learn which outdated dealmaker tools you should abandon, and which modern systems you should implement instead.
1. Generic CRMs that weren’t built for the financial industry
Generic customer relationship management (CRM) solutions are designed to provide basic capabilities to professionals in any industry, from construction to health care. This means that the solution is unlikely to offer functionality your firm needs to meet its unique, industry-specific requirements.
Even worse, most generic solutions only focus on one type of functionality: collaboration, operations, or analysis. Dealmakers within the private equity (PE) industry need a wide array of functions from each of these categories — and need these capabilities to be tailored to the financial industry so that they can:
- Help sales teams connect and share information frequently in the cloud
- Streamline processes and automate tasks to get more work done in less time
- Dig deeper into their data
| Scenario: Your generic CRM becomes even more generic
You’re using a generic CRM that focuses on collaboration and operations management. To effectively manage your dealmaking relationships, you added custom fields to all customer contacts. However, in the middle of your busiest season, a new patch removes support for those custom fields. Because most of the CRM provider’s customers weren’t using those fields, the provider wasn’t concerned about retaining features only used by a niche industry. Now you can’t access your most important data. |
A CRM built for the financial industry will include the features your dealmakers need, including:
- Relationship management — LPs and GPs need information about a prospect’s other relationships, business connections, and updates on positions within their company. A CRM built for the accounting industry can help manage these high-level relationships.
- Risk assessment and due diligence — Dealmakers aren’t just sourcing deals; they’re vetting them. Dealmakers need customized reports that show whether a specific prospect could present financial risk factors or conflicts with existing portfolio companies.
- Process and touchpoint automation — Dealmakers need automation and scheduling capabilities to keep up with their growing number of contacts. With the right solution, high-level dealmakers can maintain their relationships and build processes in less time.
GPs and LPs must manage their real-time data at the highest level, collecting information about corporations, investors, major players, and entrepreneurs. Without these functions, dealmakers will eventually outgrow their generic software and be unable to provide the best possible service to their clients.
2. Siloed third-party data platforms that slow your processes
Dealmakers frequently collect data from siloed, third-party data platforms tailored to their area of venture capital, such as CRE maps. However, when a dealmaker purchases a database of CRE deals or CRE prospects — such as a list of upcoming mergers or individuals who will soon be moved into decision-making roles — that dealmaker has no guarantee the data is accurate and unbiased, because a single vendor vetted all the information.
Worse yet, small vendors can go out of business without notice, and their data will disappear with them. If a dealmaker has tailored their decision-making methodology to a specific set of that vendor’s data, they will need to redo all the work they’ve done so far.
| Scenario: Your third-party data platform leaves the party You’re using multiple siloed third-party data platforms to assess business credibility, performance, and relationships. Every week, you manually input the data from those platforms into a spreadsheet and run an algorithm to identify your major prospects. If one of those platforms is discontinued, you won’t just need to find another data platform — you’ll also need to modify all your algorithms to account for the new database of information. |
Your firm needs to consolidate data from multiple, high-quality sources for accurate, timely decision-making. Leverage a consolidated data system that provides:
- Timely, accurate information — If a prospect you’ve previously built credibility with has moved to a high-level role in another company, you’ll need to get that data as quickly as possible so you can act on it.
- Third-party data and first-party information — When it comes to leads, you need to know how frequently they’ve interacted with your company and how much they’ve expressed intent.
- Consolidated reporting and analytics — By collecting all information in a single platform, the data can be analyzed at once. You’ll be able to determine exactly how prospects rank against one another, and assess your overall trends.
DealCloud is a best-in-class CRM built for the financial industry. The software automatically syncs and consolidates third-party data with your firm’s data, and provides in-depth analysis. As your organization grows, DealCloud will scale with you.
3. Single-use collaboration and communication tools that create confusion
Dealmakers may use many single-use tools — such as spreadsheets, word processors, note-taking and to-do list apps, contact management systems, Blackbook apps, and scheduling calendars — to collect information and connect with others. Although these single-use tools may feel convenient at the time, they ultimately lead to lost time and confusion.
Juggling between multiple tools costs dealmakers time that could have been spent making deals. Furthermore, data becomes fragmented and disorganized when it’s spread across different apps, which could lead to errors. And, if a dealmaker is on vacation or traveling for a business meeting, their colleagues and fellow dealmakers won’t be able to easily find or access information within the dealmaker’s various apps.
Most importantly, single-use collaboration and communication tools can present serious security risks. If a dealmaker starts collecting privileged or confidential information in calendars, notes, and casual chat apps, it’s only a matter of time before a data leak or breach occurs.
| Scenario: Your single-use tools don’t keep you in the loop You decide to implement various collaboration and messaging apps — such as Microsoft Teams, Slack, and Google Chat — to communicate with prospects. Although this allows you to communicate with prospects using their preferred methods, it also means you’re constantly bouncing between apps. One day, a prospect you’ve been nurturing informs you of a critical opportunity that’s only available for a limited time. The prospect is an international contact, so they use WhatsApp for business communications — a tool most U.S. companies don’t use. Because you infrequently use WhatsApp, and because you’re so busy looking at your other apps, you forget to check it and miss the prospect’s urgent message entirely. |
When managing multiple communications and collaborating across the globe, dealmakers need a purpose-built CRM that integrates with multiple collaboration tools — and offers API integration to consolidate more niche tools that don’t have native support — to collect and consolidate all your information.
- Collect information from multiple systems — Whether a dealmaker is using email or a messaging app, that data needs to be automatically synced with the firm’s CRM. In a robust CRM, dealmakers can look at a contact and see how many times that contact has called, emailed, or otherwise interacted with the firm.
- Access all the features that dealmakers need — Dealmakers should be able to manage their schedule, communications, and notes within a single system, rather than having to bounce around between apps.
- Secure your data — A single, consolidated solution secures dealmaking data in a way that multiple solutions simply can’t.
Designed from the ground up, DealCloud provides all the advanced dealmaking features and functionality that your dealmaking team needs, from conflict management to relationship management.
4. One-trick accounting and cash flow management solutions
To manage accounting and cash flow, dealmakers often build out accounting suites rather than invest in a full CRM. Although dealmakers can use the basic CRM functions within an accounting suite, they’ll eventually find that the system lacks functions that a dealmaking team needs, such as lead generation and prioritization.
Accounting suites are designed primarily to manage their organization’s balance sheet, budget, and cash flow — not their customers. On the other hand, a full CRM not only offers the capabilities dealmaking teams need, but also integrates with your firm’s accounting software to create a reliable tech stack.
| Scenario: Your one-trick accounting suite plays tricks on accounting Your dealmaking team spent a lot of money on its accounting suite, so you want to get the most value from it. You enter your customers’ information, points of contact, and business data into the accounting suite to manage your customer relationships and accounting functions. To help score prospect deals, you and other dealmakers working within the accounting suite add the potential yield from each prospect to their customer profiles. However, entering this data into a system designed for accounting alters cash flow projections. Now, at the end of the quarter, your accounting team is in a frenzy because all their numbers are off. |
Leveraging a dealmaking CRM rather than an accounting suite will support your dealmaking team in numerous ways:
- Keep a barrier between the company’s operations and its prospects — A CRM provides dealmakers with the information they need, rather than in-depth information about the organization itself and its financial operations. An accounting CRM isn’t likely to include shareholder information, just as a dealmaking CRM isn’t likely to include your balance sheets.
- Easily customize your dashboards — Dealmakers can create dashboards that show essential information, allowing them to focus on the data that they find most useful. They can also set up automated, rules-based alerts to help them stay on top of their many deals.
- Provide role-based permissions — Some dealmakers may need more information than others. A good dealmaking CRM lets you control what dealmaking information and features other team members can access.
One of DealCloud’s key differentiators is that it offers permissions and role-based groups, which allow dealmakers to control access to data based on roles. Role-based access isn’t just a security benefit: When dealmakers see only the information they need, their jobs become simpler and easier.
Abandon obsolete dealmaker tools and invest in a purpose-built CRM like DealCloud
One-off tools can disappear, and generic tools may never be enough. But if you use an integrated dealmaking ecosystem that’s purpose-built for the financial industry, you’re investing in a sustainable solution that can meet your current and future needs.
DealCloud was built for the finance sector and continues to build next-generation support for tomorrow’s dealmakers. When you work with DealCloud, you get a single, advanced system that can fulfill all your dealmaking needs — including custom dashboards, complex reporting, and complete pipeline management.
Find out more by scheduling a demo.