Venture capital’s era of cheap capital and record deal closing times is over. As high-quality deals become harder to source—and competition to win them heats up—the top firms are getting ahead by harnessing their collective network as a superpower.
The impact of relationship intelligence can be felt across the firm and at every stage of the deal process: from finding and closing the highest quality deals, to steering portfolio companies towards successful exits, and exceeding targets for your next fund.
In our guide to using your network as a dealmaking machine we review the business impact of relationship intelligence at five critical venture stages.
Workflow #1: Sourcing
The backbone of every VC firm’s operations is sourcing—finding promising companies and founders that meet their thesis or strategy, identifying the best points of contact, and determining the most effective way to reach out and begin a conversation. However, that search is challenging because the majority of the world’s relationship data doesn’t live in static systems like a CRM. It lives dynamically in our communication streams, from emails and phone calls to meetings and messaging apps. Relationship intelligence turns that vast amount of data into actionable insights.
Relationship intelligence uses the ‘data exhaust’ from email and meeting communications to score the strength of every connection. This provides rich, accurate context for everyone in a firm to source high-quality deals through warm paths of introduction.
Workflow #2: Due diligence
Due diligence happens in many different places: online, in meetings, and in email exchanges. To keep a deal team in lockstep, every update should be added and maintained in the CRM.
However, in reality this admin-heavy task often gets lost in the frenzy of a complex deal. Details are lost, updates are missed, and deals put at risk.
Relationship intelligence transforms the efficiency of due diligence by ensuring all relevant deal information is laid out in one place, thereby streamlining the process of updating deals and most importantly, keeping them on track.
Workflow #3: Deal management
Collaboration matters. The average VC booked almost 25% more meetings in 2022 than the year prior. With all those meetings, it’s easy to cross wires when deal information is scattered across different tools or lost in a meeting when notes aren’t added afterwards. This can result in wasted hours as associates duplicate work on the same deal. Worse, it can lead to a tarnished firm reputation if disjointed communications from team members leave founders with a negative perception of a firm.
Using a CRM powered by relationship intelligence makes it easy for deal teams to collaborate, and removes the risk of crossed wires. With immediate access to the relationships, workflows, and engagement histories that every team member has with external parties, everyone has what they need to quickly move in the same direction.
Workflow #4: Portfolio management
VCs play an important role in the success of the companies they invest in; coaching portfolio companies toward operational efficiency and discipline while closely watching the market to identify potential competitive advantages, investment opportunities, and strategic hires. These relationships are something founders look for when choosing investors and one of the best ways that a firm can show value against competing VCs.
Understanding how your team’s collective network connects to the needs of your portfolio companies is crucial to their success. Whether you are looking to connect executive teams with customers, talent, additional investors, or experts who can help guide strategy and expansion, relationship intelligence highlights the best path forward for making and strengthening these connections—and helping portfolio companies succeed.
Workflow #5: Raising a fund
After a blockbuster few years, many firms are finding it challenging to fundraise. To raise a fund in this climate, firms need to be able demonstrate value to current and future LPs through clear and consistent updates on the progress of fund(s). Telling a compelling story requires data—both to showcase results and make outreach relevant for potential new investors.
With relationship intelligence, dealmakers can build a narrative for LPs using data and automate the creation of reports that resonate most, while providing customization and visualization tools that keep everything engaging and on-brand. Relationship intelligence can also help to ensure that relationships with current and prospective investors remain strong, with reminders to stay engaged and prompts to reach out to any LPs who may have passed on a previous round.
To read more about how relationship intelligence makes it more efficient for your teams to find and close more high quality deals—and how an investment in relationship intelligence is a competitive differentiator—download the full guide.
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