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3 common misconceptions about venture capital CRM software

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Despite the ubiquity of CRMs in today’s organizations, they continue to be misunderstood. Many prospective users struggle to see the value of a CRM and, at best, view it as just another tool. As a venture capitalist, it’s important to understand the potential of a CRM and how you can make it work for you. 

Here are three common misconceptions that you need to understand in order to maximize the effectiveness of your CRM. 

CRM software is just a tool

Viewing customer relationship management as just a piece of software—and not as a key strategic investment—limits the perceived value of a CRM. Adopting this mindset will set the tone for how you and your team embrace your CRM and ultimately impact the results it can drive.

Here are two tips that you should incorporate to ensure that everyone in your organization understands the full potential of a CRM and it delivers great results:

Think of your CRM strategy as distinct from your CRM tool

  • Customer relationship management is a business strategy that optimizes outreach for your best deals by nurturing long-term relationships within your team’s network.
  • CRM technology enables that strategy to become a reality by identifying and supporting the management of your most valuable relationships. 

Make sure that your entire organization understands the bigger CRM picture.

Venture capital CRM platforms provide value to many areas of your firm, including:

    1. Deal and pipeline management
    2. Business development
    3. Investor relations
    4. Fundraising
    5. Marketing 

A venture capital-specific CRM  also has the added benefit of merging your relationship management strategy and CRM technology through automation and enrichment. Where traditional CRMs can easily become IT-led initiatives with low adoption rates, VC CRM technology creates better adoption rates across your organization. Best in class VC CRMs will further increase adoption rates and the joining of strategy with technology through relationship intelligence.

UK CRM consultant Matt Eccles describes CRM as both a strategy and a technology. He notes that when CRM is thought of as a strategy it puts the focus on the customer and building strong relationships with customers in an effort to achieve greater loyalty. 

All CRM software is the same

There is no one-size-fits-all CRM solution. VCs especially will need a venture capital-specific CRM and one that will be flexible to meet your needs. The legwork you do to plan the implementation of your CRM (both the strategy and the tool) is critical. Here are two steps you can take to minimize common implementation obstacles: 

Invest the time up front

Your team has to find a solution that will not only drive the success of your firm today—but one that will work tomorrow. Consider the size of your firm, as well as your vision for scaling up and all that entails. French venture capital firm Serena Capital has summarized its approach to implementing CRM in less than six weeks. A critical first step is to scope the opportunity: 

“Your specifications should be written on 2 pages max: What kind of benefits do you expect from the system? Save contacts? Manage your deal team? Manage your marketing campaigns? It will impact your choice.”

Understand the full scope of your requirements

Do a deep dive and really understand the answers to Serena Capital's questions above. Tailoring a CRM’s functionality requires careful configuration, and, with the wrong partner, long cycles of custom development. You may also need to integrate it with other apps and platforms, something that will likely require specialist, program-specific knowledge to achieve. 

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CRM implementation is overwhelming

Integrations with existing tools and data providers in combination with more automated data transfer processes can eliminate a lot of the time it takes to get a CRM up and running. Some can be up and running for full use in as little as 72 hours. Yet even the most user-friendly and streamlined CRMs require you to be thoughtful and strategic during implementation in order to reap the most benefit. 

Focus on automation.

A quality VC CRM will automatically import key information from your email inbox and previous database instantly. Working with a partner that understands the value of your contact data and the speed your firm needs to move means you can be up and running without any dirty data or missed inputs.

Recognize the most valuable pieces of your CRM.

Your deal data and your relationships are ultimately your key value drivers. With these in mind, make sure you choose a CRM that’s supported by relationship intelligence technology to get the most value from your expanding network.

Tie your CRM to business outcomes.

Review your CRM's function early on to ensure that the new technology has been adopted by your team and is being utilized effectively. This will also include leveraging reporting functions to align your whole team with your customer relationship strategy:

  • Tie the CRM software back to your business strategies—routinely analyze the results of your investments to understand your data.
  • Reflect on which teams and firm partners are benefiting from your CRM the most and determine how their learnings can be shared.
  • Review how your processes have or have not changed. Your ideal CRM will improve your existing workflows, not change them, but take time to understand what changes may need to be made in order to set your CRM up to help you accomplish your goals.

Like most things in venture capital, when it comes to your CRM, if you put in the work, you will be more likely to reap the rewards. By taking the time up front to design a relationship and deal management strategy with the software itself you’ll set yourself and your firm up for success.

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