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How data analytics helps manage increased deal velocity and competition

2020 was a record year for the venture capital industry, and that success laid a strong foundation for 2021 to follow a similar path. The industry did not disappoint; Q1 investment activity was up nearly 93% from 2020’s first-quarter results.

According to PitchBook, some 3,987 venture capital rounds were closed in the United States during Q1 2021, totaling $69 billion worth of deals. Aside from overall investment activity increasing, Q1 was also the largest quarter on record for participation of non-traditional investors.

With the proliferation of capital, VC firms, and other types of funds entering the market, competition is accelerating, and deal timelines are compressing dramatically. Deals that used to take weeks or months—from the time you heard about a new deal to signing term sheets—may now take as few as eight days.  

Increased competition and deal velocity mean teams need to make decisions faster and smarter by leveraging data at every opportunity. Your team can rely on technology to not only automate the process of gathering this data but also to make your deal flow process more scalable, efficient, and informed. 

How to close deals faster with Affinity Analytics

Real-time analytics allow you to hold a magnifying glass to your most important deals—surfacing the underlying data when you need it most. The same analytics also provide a complete view of your organization’s deal flow, showing the inflection points at each step in your pipeline. Let’s explore three key charts in Affinity Analytics that can help you efficiently drive deals through your funnel while focusing on the right opportunities.

End-to-end funnel analysis 

The funnel analysis report provides an easily accessible 10,000-foot view of your overall deal flow, showing how deals are moving through your funnel from sourcing to close. With Affinity’s filtering capabilities, you can focus your analysis on your most important sourcing categories (referrals, conferences, social media, etc.), and then review each step in the process in more detail. 

a deal funnel chart displays percentages of deals in each deal stage

Breaking down the funnel allows you to see your conversion rates not only by each stage in your process, but also by categories like industry, geography, deal owner, and company size.

With this level of granularity, you can easily identify where in the funnel your deals most frequently drop off, work to close that gap, and ensure your biggest opportunities don’t fall through.

Average days in each status

Analyzing the average amount of time deals spend in each status helps you identify where you’re losing time. With that data in hand, you can focus on process optimization at specific points in your deal flow pipeline. 

Understanding which deals are stuck—and where in the pipeline they're being held up—allows you to target specific improvements that need to be made and align teams to drive deals forward efficiently. In the graph below, you can see that deals are spending a significant amount of time in “Diligence” and “Term Sheet”, offering an opportunity to make some process standardization and efficiency improvements in those workflows. 

An "average time in each deal stage" graph shows both average and current deal flow pipeline movement.

Many of our customers take this analysis one step further by looking at efficiency charts. These charts highlight specific deals that have been stuck for a defined amount of days in a key stage. Affinity customers leverage this report to help optimize Monday meetings, showing what needs attention and where to take targeted action. You can also utilize this data in combination with your deal sources, so you can see how all of your deals are moving through your pipeline.

Deals by source  

While your funnel analysis report provides a comprehensive overview of your deal pipeline, diving into the details of your deal sources can provide additional insight into where your deals are coming from and how successful each source is. When you’re processing hundreds of opportunities simultaneously across team members, it’s important to understand where your highest quality deals are coming from and where you should be focusing your time.

Quality deals come from different sources for different firms, with each team tracking different sourcing KPIs. One team may be especially conscious about sourcing opportunities in specific industries or with founders from specific demographics. Below, you can see how one firm is tracking deal sources by state and by sector to ensure their sourcing goals are being met. 

Deal source by state and industry depict where deals are coming from.

By understanding where your most frequent wins are coming from and where others are stopping in your process, you’ll be able to make more informed decisions at the top of your funnel. You can identify if you’re effectively filtering out noise early on and not wasting resources down the funnel by doing due diligence on companies that aren’t a good fit. 

With increased competition and faster-than-ever deal velocity, teams need to be able to make decisions quicker, mobilize when great opportunities arise, and leverage data at every opportunity to drive efficiencies.

make faster, data-driven decisions with Affinity Analytics. Want to learn more? click here to talk to our team