Adopt Technology to Power Deal Flow Management

We’ve shared how important it is to properly implement technology in order to realize the full organizational impact of new systems on your firm. The industry agrees— deal flow management tools help firms gain visibility and improve the investor experience.

But anyone who’s ever been involved in the process knows that there are real challenges to implementing systems and managing change in order to get full value out of technology, including tools designed for alternative investments.

Which of the following actions have you taken to mitigate margin erosion of your deal flow management company?

While most firms plan to adopt technology in order to strengthen investor relationships, there isn’t a clear path to successful implementation. And without a plan, proper deployment and getting users on board can be very challenging.

In fact, it has been our experience that barriers like change management challenges, achieving a high user adoption rate, and providing adequate initial and ongoing training can be daunting and have the potential to derail projects.

It’s not uncommon for a firm to get 80% of the way to its goal of implementing a deal flow management and fundraising solution only to find that the last 20% is the most difficult.

It’s a little like running a marathon. People who have completed one will tell you that the last few miles are more taxing than the prior 24 combined! But you have to finish, of course.

Partially implemented alternative investment solutions are of no use to anyone.

We’ve found that painting a clear and compelling picture of the positive impact that deal flow management and other deal technology tools can have is a strong motivator for teams to do whatever it takes to get across the finish line.

Understanding how systems like a CRM or business intelligence engine can streamline operations, increase productivity, and, in general, help the firm succeed makes everyone want to collaborate effectively.

And that collaboration can be the key to completing the firm’s transition to an organization-wide use of advanced technology for alternative investments.

To motivate you, we would like to share an example of what 100% can look like.

We compiled some data into an Altvia Answers dashboard to show the types of questions you can answer when you fully adopt deal flow management technology and leverage clean, accessible intel to power your deals and inform your fundraising activities.

The firms we work with will tell you: Implementing deal flow management and other solutions is a true game-changer.

For one thing, once you have your advanced technology for alternative investments up and running, the insight you need to inform your decisions is just a few clicks away. That means less time manually analyzing data and more time taking action.

For example, the right CRM and business intelligence tools can answer critical questions about alternative investments, including:

Which industries and sectors have the highest investment activity in you deal flow management system?

Generally speaking, it is not a good use of time and resources to “hunt” in areas where there is very little happening.

One quick query can help you zero in on industries and sectors where there is more potential for profit. If you don’t do that search, you can end up wasting your efforts while other firms are reaping the benefits of their deal flow management solution.

In which countries are the most active sector investments happening?

It is crucial to have a big-picture understanding to help guide your activities. And that understanding needs to be based on current data. Being able to see at a glance what’s happening in a particular country or region gives you a competitive edge.

When are investments made in my sector?

An accurate gauge of investing trends helps you align your work and objectives with the rhythms of the industry. Going “against the grain” tends not to produce the best results.

Total number of monthly commitments and amount raised by each investor type.

Here again, going after investor types that aren’t demonstrating robust activity—or at least increasing activity—is typically not a great strategy. A quick look at your dashboard can give you the information you need to choose wisely.

Is it time for your firm to implement leading-edge deal flow management technology specifically designed for alternative investments?

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 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 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 — 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.

deal flow management