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Only 1% of private capital firms fit the definition of what it means to be a data-driven investor. This is defined by:
- The presence of at least one engineer on the team
- The development of internal tooling that uses data to improve at least one element of the deal process
But the vast majority want to increase efforts and resources in this area. Engineering and analysis is now a core function in many funds—today you’ll find more than 250 private equity and VC job postings on LinkedIn—something that was practically nonexistent ten years ago.
The challenge is where to begin, and whether to build from scratch or bring in tools. Affinity’s Co-Founder, Ray Zhou, advises firms to start small and scale, saying: “With your data needs defined, you can be proactive about sourcing datasets that cover those signals and attributes and experimenting with that data using tools that are widely available. The flexibility of building data-driven initiatives means that you can start small and then iterate on what works well.”
Now is the time to get ahead by establishing strong datasets that focus on high impact areas like deal sourcing.
Becoming a data-driven investor
In private equity, a data-driven sourcing strategy balances your instincts and experience as an investor with insights from data that enable you to make educated decisions as fast and efficiently as possible. The first step is determining which signals matter to your thesis and why.
Take early deal evaluation. To better understand if a deal is a good fit, signals like current full time employee (FTE) headcount, headcount growth, revenue growth rate, funding stage, and founder background are crucial.
For opportunities that had previously been put on hold, the relevant signals will differ. Information around leadership departures and hires, headcount trends, and changes in total addressable market (TAM) start to matter more.
Moustafa ElBialy, CIO at Kleiner Perkins, says, “Invest in scalable solutions. Invest in your data. It's not about which tool that you're using. It's about the data you're aggregating and how you’re housing it, and make it as scalable and flexible as possible, so you can plug it into different applications, or SaaS tools like Affinity.”
One often overlooked source of data lies in what your firm already owns but may not be utilizing effectively—namely, contact and activity information that is stuck in emails, calendars, and meetings.
Being able to view and analyze these insights in one place helps bring additional context and deal signals into focus that would otherwise remain buried across disconnected datasets.
Having an integrated AI-driven notetaker adds additional value by reducing the effort required to capture and centralize meeting notes alongside other sources of deal data. From there, you can observe patterns and bring in signals from less traditional sources that strengthen the quality of the opportunities you source.
Affinity lives at the heart of the data-driven investor’s tech stack
Our automatic data capture ensures your CRM data is complete and up to date without the need for manual data entry. This saves more than 200 hours per dealmaker each year, time that can be reallocated to sourcing high-quality deals.
Enriched data in Affinity covering funding, firmographic, biographic, and growth information provides additional insights at your fingertips—so you can make data-driven decisions faster. You can also view an AI-powered list of a potential investment’s competitors with Affinity’s Industry Insights, enabling faster and more informed diligence.
Use our API to centralize all of your data in one place, either by pulling Affinity's relationship insights into other tools or pulling data from other tools into Affinity.
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A complete deal sourcing workflow spans multiple tools. Many associates spend all day moving between their web browser, virtual meeting window, CRM, and data vendors like Crunchbase and Preqin, and LinkedIn. Then there are internal messaging tools and email inbox. The list goes on.
As the pool of viable deals shrank last year, the market became more competitive. Even as private equity optimism for dealmaking returns, to remain competitive you need to master being both thorough and fast. Workflow consolidation and having your deal and contact data in the tools you use is a necessity.
In a perfect world, you’d have all the information you need about a deal at a glance. You’d be able to easily build a list of companies in an industry where General Partners have specific expertise. You’d know who on your team knows someone at a company you want to target, and how recently you spoke to them. You’d be able to evaluate a company for thesis fit, review and update executive team information, and make list-based calculations to reach a data-backed decision faster. All this should happen from where you work—without interruption or additional effort.
We can't forget the curated data that comes out of the brains of our peers is really valuable and we need to capture that back into our CRM so the whole team can utilize it.
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Making outreach more effective
Having data available where you work means you can make educated decisions faster without disrupting your workflow; it also enables you to be more relevant with the content of your outreach. With key information like employee growth, funding history, and firmographic data, you can understand and communicate each deal opportunity more deeply.
In addition, being able to cross-reference a wide net of external data sources, conversations with similar companies your team has invested in, and a list of relevant competitors (with key firmographic and funding information) makes your firm’s value more compelling.
It takes less time to generate hyper-personalized insights that confirm to prospects that you’ve done your due diligence, understand their mission, and can offer unique support in the form of industry and/or operating expertise. By sharing data on the number of introductions you’ve made for your portfolio companies by expertise and job title, you can further quantify the value you deliver.
The power of extensions
Our extensions unlock the ability for you to capture insights in the flow of work, and access enriched data about companies outside of your network from anywhere—such as when reading a referral email or visiting a prospect’s website.
Affinity Pathfinder (built for Chrome and Gmail) and Affinity for Outlook dramatically reduce the time it takes to find the right deal with relationship intelligence, business insights, and a connection to your CRM as you research and engage prospects. With features like one-click updates to deals, there’s no need to make changes to your current process, or to constantly switch back and forth between tools to get value out of the CRM.
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There is a significant appetite to use AI across private capital, with 92% of respondents in a recent Affinity survey saying they have some plans to adopt it this year. Of those that already have, another study reported that private equity firms lead the way with 33% adoption compared to only 19% adoption in venture capital.
Across all segments of private capital, using AI to automate daily tasks (76%) and to research companies of potential interest (64%) are the most popular use cases. Both of these figures are up year-over-year. Driving productivity gains—including within deal research—indicates that firms are focused on making their deal sourcing efforts more efficient. Pairing AI with relationship intelligence can help firms reach that next level of efficient productivity, allowing them to effectively find and close the highest quality deals before their competitors do.
Keeping relationships warm
Relationship intelligence uses AI-driven algorithms to ingest and analyze firmwide communication data, giving firms an up-to-date view into the strength of every relationship within the network. With this, firms can understand (and act on) their team’s entire network at a glance.
This level of visibility uncovers warm paths of introduction that would otherwise have been obscured. Booking initial meetings is easier, and investors can go in confidently with the context they need to make an impact.
In situations where a deal might not be forthcoming, relationship intelligence helps firms maintain relationships with investment bankers—or stay top of mind with companies as they warm to the idea of taking private investment. Triggers and automations alert team members when it comes to the optimal time for follow up, allowing them to take proactive action that positively impacts longer-term deal sourcing.
“Private equity is very much a relationship business… and, I think without Affinity, new associates and analysts have a much longer learning curve, and it takes them much longer to build a book of relationships.”
Relationship intelligence also helps firms understand their most valuable relationships. As Moustafa ElBialy, CIO at Kleiner Perkins, puts it: “We will never have AI make investment decisions, because so much of it is about the relationships. You're investing in founders, you're investing in people."
Do you have a founder or fellow investor who has helped source valuable deals in the past? Actively nurture them with the help of automated follow up reminders, real-time relationship strength scores, and an easy and secure way to share live data on target lists.
Relationship intelligence turns your network into a dealmaking machine
Our relationship intelligence takes your firm’s entire collective network (including inferred connections identified through shared work experiences) to surface undiscovered connections and provide warm introduction paths within target companies. With this process automated, your team has higher quality insights—and more time—to focus on opportunities that fit your firm’s investment thesis, and close those deals faster.
For deals that develop over time, automated reminders and triggers make it easy to act on relationship strength changes and maintain your most valuable connections for when new deal opportunities arise.
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Combine data and relationships to source high-quality deals in 2025 and beyond
Private equity undeniably faces headwinds. While rates are falling, there is still a lot of market uncertainty. Companies that can extend their runways through efficiency are still reluctant to accept valuations lower than the records set in 2021. This limits deal volume—but there are still deals to be done.
What remains true is that the most successful firms are focused on refining how they use data and relationships.
They’re using data in more meaningful ways to navigate the research and diligence processes faster. This means they can prospect key contacts, keep relationships warm, and close the best deals before their competitors do.
Set yourself up for success by automating what you can and acting on the data you collect. This will give you the time and insight to dedicate to the activities that deliver the highest ROI: building new relationships and strengthening existing ones.
Affinity enables your firm to collect and analyze data at scale, work more efficiently and without context-switching, and use AI and relationship intelligence in deal sourcing efforts. That combination gives you a powerful competitive advantage.
We now have a better way to view our network and of who we know; and what, when, why do we know people; and when do we know that from. Previously, we didn't know. And now we have a way better and way more effective method of engaging with the people we know, and getting productivity out of that.
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