How to Target the Right Investors with Fundraising Software

How to fundraise in the next normal

 In the first three quarters of 2020, just 39% of funds closed in 12 months, according to a survey by Preqin. The pandemic revolutionized the way relationships are built and prolongs fundraises. 

Sometimes massive change happens on a dime, even in industries prone to more traditional tactics. In response to COVID realities, the face-to-face nature of the fundraising process was forced to evolve. 

The winners that emerged are the firms that embraced fundraising software and data-driven deal-making, but with a strategic approach. This means your fundraising software might be able to deliver hordes of data, but to what end? 

Always ask what can I do with this information? Do I need this data? Can this information help me optimize a piece of my decision-making process? Can this information speed up my daily tasks?

Don’t be drawn in by data that doesn’t serve a purpose. The best fundraising tools will help you take the most profitable action by answering several questions. 

Optimize your fundraise with these four actionable questions 

Who are my top capital raisers?

Prioritize your top capital raisers and give them the most attention. Sometimes the rainmaker isn’t obvious. Using data from fundraising software can help you take any bias or preconceived notions out of your analysis. 

The result could be you uncover superstar fundraisers that you might not have expected. Effective fundraising software can isolate these prime capital raisers quickly so you know where to provide support and how to cultivate even more top talent. 

What regions are we most successful in?

With travel being absolutely upended in 2020, firms will undoubtedly be simplifying and reducing their travel plans. For the foreseeable future, crisscrossing time zones won’t be part of the fundraising process.

When travel is essential, define your most successful regions using data generated from your fundraising software.

In the new era, a modern fundraise approach must include the capability to filter and surface the top cities, states, and regions for capital raising. 

Use your technology and tools to create an efficient travel itinerary that leaves out any non-essential stops. 

Where are our best introductions coming from?

Don’t write off introductions to focus on the middle or end stages of raising capital. An introduction is still a part of the funnel and should be analyzed with as much vigor as other stages.

Your fundraising software should help you isolate which introductions lead to the most return on investment. You can uncover hot spots you didn’t expect among that data. 

What are the characteristics of our most committed LPs?

The lifeblood of any fund is a base of committed LPs. To generate a solid base of LPs you need to know which characteristics to look for.

Your internal data is powerful. Looking at your current LP lineup you can see exactly what traits are leading to longevity.

Fund of funds LPs are clearly valuable. However don’t assume they are your best LPs, use your internal data to compare different LP types. Note any surprises or trends. Use those learnings to pursue more of your top-tier LPs. 

Your tools and data should deliver a measurable advantage

Fundraising software and data-driven methods are not a silver bullet, but these tools can give firms a measurable advantage. 

The question is, can you target the investors that have historically yielded the most success with your current tech stack? Does your toolset give you data that drives profitability? 

We have much more to add to this discussion For deeper insights on our approach to a cutting edge fundraise, listen to Preferred Return Episode 1: “Own Your Edge”, as Kjael Skaalerud, SVP of Revenue at Altvia discusses what’s top of mind among PE firms shopping for technology. 

Learn from our insiders how cutting-edge technology used for modern sales organizations translates perfectly to raising capital and finding investment opportunities.

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.