The VC Tech Stack: Tools Used by VCs

We’ve advocated for it before – PEs/VCs that take the time now to empower their team with data and technology have an easier time differentiating from the competition. The first step to level up your strategy is building a solid tech stack.

With so many tools available, how can you be sure you’re choosing the right software and tools for your firm?

Read on as we break down the current landscape of tools available to compile an industry-leading tech stack.

The Core Components of the Modern Tech Stack 

The modern PE/VC firm should be stacked with tools that help throughout each stage of the deal process, from consolidating scattered spreadsheets into a centralized platform to ensuring transparency of communications with leads and portfolio members across the entire firm. 

There are a few core areas every tech stack should address: 

  1. Traditional data

    From company financials to expert opinions and forecasts from leading research providers, traditional data can be leveraged to help inform your firm on new deals. This data is especially important during the research and due diligence phases.

    To access all of that public information and centralize it in one place, firms can leverage leading tools like S&P’s Capital IQ, along with publically available websites like Crunchbase.

  2. Alternative Data

    Unlike traditional data, alternative data combines information from non-traditional sources like social media, consumer transactions, web traffic; data that is typically not readily available internally through traditional sources.

    By leveraging alternative data sources, firms can identify deals earlier on in the sourcing process and single out the best investment opportunities for their firm that much faster. Incorporating alternative data tools like Capterra and G2 can arm PEs/VCs with powerful insights to compile compelling stories and industry information for stakeholders.

    To take it a step further, firms can push their alternative data to a centralized hub,  like Altvia, to transform that information into visual charts that help tell a stronger story, providing additional value for LPs and portfolio members. 

  1. Research

    You already know how important research is in the sourcing stage of the funnel. Ensuring you have the right tools available to help streamline that process is critical to your firm’s success.

    While traditional research tools like Forrester can help provide deeper insight into how certain world events impact industries and businesses, software like PredictHQ can help firms predict the impact of real-world events or market shifts. Access to this kind of predictable scenario building will arm your firm with the insight and knowledge needed before making decisions.

  2. Portfolio Management

    The more members in your portfolio, the harder they can be to manage. With portfolio management software, PEs/VCs can organize and unify all of that information in one place. From fund and equity information and reports to KPI monitoring and reporting, portfolio management systems, like VestBerry and Altvia, can help aggregate that data down to the fund level. 

  1. Dealflow CRM

    A firm builds its success upon a foundation of strong relationships, and the right CRM can help bolster those. However, not all deal flow CRMs are created equal, and, without relationship-driven AI built-in (like Salesforce, for example), they serve as more of a transactional source rather than a virtual assistant to your business.

    CRMs, like Altvia, can serve as a centralized source of truth, connecting data from your entire tech stack and helping optimize it across the firm, such as providing AI-driven insights, like helpful alerts on when to follow up to keep conversations flowing. 

Take Your Firm from Low-Tech to Tech-Driven 

Despite growing investments in high-tech industries, venture capital has a reputation for being a traditionally low-tech industry. However, that’s quickly changing as more and more firms embrace software and data to differentiate. But, with this change also comes the need to juggle new tools and software.  

As you begin to shift from spreadsheets to streamlined software, a simplified approach to your tech stack can make the migration a bit easier – and Altvia can help. From portfolio management to AI-powered insights, Altvia can serve as your firm’s single source of truth. 

To learn how Altvia’s solutions can fit into your firm, contact a member of our team to start a conversation.

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.