How can you use Venture capital CRM as a valuable weapon?Posted by Aisha Wehrle on June 10th, 2021 Venture Capital Deal Flow is a term for the rate at which business proposals and investments pitches are being received by the company. The most famous and successful venture capital firms regularly receive hundreds of businesses plans each month. From among these, it is not unusual for a VC firm to actually fund only 0.25%–0.5%. Active angel investment groups will typically receive dozens of plans monthly, but because of the much smaller number of plans compared to VCs they tend to fund a somewhat higher percentage (0.5%–1.0%). Once a company makes it through the group's screening process, however and is invited to present to the group's full membership, its chances of getting funded rise to about 18%. Rather than a rigid quantitative measure, the rate of deal flow is somewhat qualitative and is meant to indicate whether business is good or bad. A funds or venture capital deal flow is generated from many sources. The most valuable referrals often come from entrepreneurs or companies in which the fund has previously invested; from other funds looking to syndicate a deal; and from professionals (such as attorneys and accountants) who are familiar with the fund's investment criteria. Other sources of deal flow are investment bankers and "finders", who expect to receive a fee (from either the company or the investor) for making the introduction. Many funds and groups (but not all) will also accept business plans "over the transom", that is, as an unreferred submission from a company with no previous relationship with the funding organization. In practice, however, such unreferred plans are usually much less likely to receive funding. In order to create and maintain a sufficient deal flow, venture capitalists and angels spend much of their time doing business development, raising their profiles by giving speeches, writing blogs, and networking with others who also work with early-stage companies. VCs and angels also regularly attend conferences and "venture fairs" where multiple companies pitch their businesses to investors. The state of the economy has a significant influence on the level of deal flow. Economic expansion and robust equity markets will usually generate healthy deal flow for most financiers, while a recession and sluggish equity markets may generate some deal flow for only the most established players. Before you can improve the efficiency and effectiveness of a fund’s investment process, you need to first find ways to improve and increase your overall deal flow velocity and volume. Finding numerous high quality opportunities is important since the companies invested in from an initial meeting can range anywhere from 1% at Homebrew to 0.7% at a prestigious firm like Andreessen Horowitz or 0.5% in more boutique funds like GREE Ventures. With only around 1% of those companies afterwards reaching the vaunted unicorn status. There are five core areas any VC can focus on in order to improve their deal flow:
Deal flow management software equips teams with tools to fast-track deals, manage their pipeline, and keep decision makers informed. Every aspect of the deal, from diligence to integration, can be managed with the software. Venture Capital CRM helps venture capital firms maximize their networks and streamline sourcing, diligence, deal tracking, and LP relations. A good CRM for venture capital and private equity should contain these out-of-the box:
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