Case Study: LFM Makes The Switch To Maximize Deal Sourcing And App Integrations

In October 2014, LFM Capital opened its doors in Nashville, Tennessee, and successfully closed its first fund. LFM invests in lower middle-market North American manufacturing and industrial service companies and is led by a successful Fortune 50 team with experienced global operating executives and private equity professionals. During the firm’s early years, the direct deal sourcing model that LFM employed to find new deals was a non-traditional approach and required nothing more than a simple CRM system to keep track of their contacts.

The Challenge

As LFM’s volume increased, they discovered new tools that were instrumental to their direct sourcing process. Tools such as Outreach.io, SourceScrub, and DataFox gave LFM the performance metrics they needed to optimize their operations; however, even with technology in place, efficiency for the team remained an issue.

After doing some research, Ginsberg realized the best solution for the team would be a CRM that could integrate with their favorite applications. While doing her due diligence on private equity CRM vendors, Ginsberg was referred to Altvia through LFM’s outsourced investor relations resource, who also works with several other firms and had seen the Altvia platform first hand.

Around that same time, Ginsberg attended a private equity event and shared with her peers the initiative their firm had to switch CRMs. “A senior-level executive was raving about their firm’s recent switch. When I asked who they switched to, he said Altvia.” The word of mouth referral by not one, but two independent sources was a clear validator.

The Solution

Ginsberg recognizes the level of customization Altvia has to offer, “I have access to one interface, while my colleagues on another team use a separate interface that works more effectively for them, and all the data comes together all in one place that we can all have easy access to.”

To get the LFM team back up and running with their favorite applications, like Outreach. io, SourceScrub, and DataFox, Altvia trained their team on AIM, and how to use their third-party tools within the system, providing a seamless deal sourcing workflow that gives them back time in their day. “We were blown away; the entire process was painless and it was a seamless transition to get up and running on Altvia,” Ginsberg shared about the communication with Altvia during the time of implementation.

The switch to a more robust private equity CRM system was necessary for LFM’s future growth. “Private equity technology is changing so quickly. I feel really good that we are now on Altvia and Salesforce because I know that we can add more tools and applications over time very efficiently.”

Ginsberg was asked what advice she would give another firm that was searching for a new CRM. “Do your due diligence with vendors,and always get references and speak to them directly.” Ginsberg went on to add, “Believe it or not, it has already happened to me, and I’ve told them to check out Altvia.”

A traditional crm was built for general ‘customer’ scenarios

Software platforms have made the world a better place by making work a better place. Indeed the world is better off when people enjoy their jobs even marginally more, and workplace applications on big CRM platforms like Salesforce.com have done that and much more.

But the potential that platforms like these offer presents diminishing returns: once the platform provider has engineered too many industry specific components into its platform, its usefulness for other industries begins to be threatened, and with that so do the usefulness of the component tools built into the platform.

So it is with the CRM category that Salesforce.com has defined: it is generic enough to work for many industries, and yet still offers the potential for others to round off the edges and nail more vertically-oriented and extremely tailored software solutions.

Private capital markets are actually a great demonstration of this dynamic. Where generic CRM platforms simplify — appropriately so — to assume there’s a business, a customer, a sale, and service of that customer, there are a few industry-specific pieces that are missing.

Take for example, that investors become customers by investing through legal entities the GP raises. It’s a subtle but important nuance that just doesn’t make sense at a platform-as-a-service level (because it’s overly complicated for a simple one-time sale that many industries require), but which can easily be added without 10 years or software engineering. Once provided, the rest of the platform’s components become tremendously powerful again and you’re set to take over the world.

As a traditional CRM in our pillars methodology, these nuances must be present to properly account for investors in these legal entities, potential target companies and which are owned by these entities, the context of all interactions with these parties (as well as the appropriate overlap, ie co-investments), and how you’re arriving at finding these opportunities on both sides of the equation, such that you’re able to piece together what’s effective and what’s not. Not just because we say so, but because these are the very relationships and data that are key to the motivation behind a CRM in any industry.

It’s critical, too, that the valuable publicly-available information that helps to enrich CRM systems and save users painful steps of entering it themselves is fully-integrated at the platform level.

Again, look no further than the 3,000+ pre-built integrations that Salesforce.com — the creator of the CRM platform concept — has at a platform level to do so, and which only exists by way of holding just short of overly-specifying certain industry workflows that would present challenges to properly integrate.

Stakeholder reporting and communication (investor relations) draws on a range of datasets

The traditional “customer service” model of CRM systems once again makes overly-simplified assumptions about the customer relationship when applied to private capital markets.

In fifteen years I personally have yet to hear the terms “warranty” or “service call” in this market because it’s just not the same. But make no mistake, as uncomfortable as it may be to say aloud, customer service is more important now than ever and it’s constantly happening; the industry is, after all, considered to be a financial “service”.

As it turns out, that service is primarily information-based — it’s driven by data and takes the form of reports and analysis that drive decisions, and then end up again in investor-facing reports and analysis.

The foundational elements of a private capital markets CRM must be built such that they accommodate this data (like we discussed above), but so too that it can accommodate additional supporting data that investors (customers!) need in the context of service.

Oftentimes this supporting data — financial metrics and time-based values, for example — is believed not to meet the traditional definition of CRM and the natural thought is “well, better do this in Excel!”.

While I happen to believe Excel is still the greatest software application ever built, its introduction to this value chain we’ve discussed herein actually creates the problem many firms suffer from: key data needed to provide customer service (again: effectively the entirety of a firm’s reports and analysis) is now in disparate systems and detached.

Both of those dynamics are important and distinct: not only is this supplemental data disparate, but when brought together there is no logical association that can be made between the two data sets.

Allow me, then, to make the point very simply: not only can this financial and time-based value data (you may be thinking about is as “portfolio monitoring” or “accounting”) be a part of a CRM, it is arguably the most important part of a CRM because it’s at the core of what providing service to the customer entails — information that comes out of data!

Firms need a digital method to engage stakeholders (ie investor portals)

Investor portals are not new; in fact, for many of us — including myself — they conjure up horrifying nightmares in which we’re aimlessly guessing at folders to find the newest document we need.

So in lies the opportunity: not only have the portals we’ve come to hate not simplified the process of acquiring information, they’ve failed to create an entirely new experience that is “customer service” driven.

To be fair, this is not a B2C market where you’d be long out of business for not having focused on customer service and thus the customer’s technology-driven experience. But don’t expect to be around too much longer if you aren’t thinking about this shift.

Today’s institutional investors increasingly expect this same consumer-like experience, and a massive opportunity is being missed by not providing it. It’s not about providing them the experience they desire; it’s more about the ability to measure engagement that is had in return.

Put simply: what’s keeping the market from providing this experience is the availability of the information that’s required to create the service that provides the experience.

If you’ve hung in this long, you know that by focusing on your CRM, you have the data that’s required to manage the customer relationship and the technology-driven experience through which that information is shared to create a differentiated and opportunistic customer experience.