July, 13 / 2022
Key Benefits of Using a CRM For Investor Relations
To a large extent, the success of any venture capital firm also depends on building and maintaining great relationships with its investors.
Every investor relationship is unique and requires bespoke management, and the right tools that can help with relationship management are essential. If your firm is interested in growing its investor network, a dedicated CRM for investor relations management is a must-have. Let's look at why it is an essential tool and how you can use it to your advantage.

What is an investor relations CRM?

Investor relations CRM is a management software that allows one to manage relationships with potential or existing investors in a fund. These relationships start well before the venture fund is up and running. The first time investors are approached is during the fundraising period. Those who decide to invest become Limited Partners in the fund and General Partners develop the relationships with their LPs through an established communication model throughout the lifetime of the fund. And it all starts again with the next fund being raised. The goal of investor relationships CRM is to capture as much information as possible about the history of interactions with the investors to support and solidify the relationships over time.

Why doesn't a generic CRM work for Investor Relations?

Typical CRM software for venture capital teams usually only covers the sourcing pipeline and relationships with investors are managed with spreadsheets or emails. There are three reasons why a generic CRM doesn't work for Investor Relationship management:

1. Generic CRMs don't allow multiple use cases and only manage a one-dimensional funnel workflow. They don't really allow to make the difference between investors and startups and run separate funnels.

2. Many fund managers want to hide some sensitive investor communication from the rest of the team, and generic CRMs don't allow to make certain conversations private.

3. Any generic CRMs see relationships with investors as stopping when they invest in the fund. The CRMs are not designed to deal with your communications with LPs, so that you can leverage the full history of the relationship when you are ready to fundraise for your next fund.

By not centralising all the accumulated knowledge about your current or potential investors and your history with each of them, you risk losing key information that helps you strengthen the relationships and fundraise more funds in the future. The better the tool, the more you know about your investors, which will lead to stronger relationships.

The benefits of using a dedicated CRM for Investor Relations

Investor Relationship management CRM allows venture capital firms to operate smoothly, efficiently, and nimbly. Forward-looking investors understand that it's challenging to draw the right conclusions and predict results without reliable information. Below we summarise the key benefits of an IR CRM tool and how it can take your investor relations to another level:

1. Keeping track of fundraising conversations

2. Centralising investor data

3. Managing and leveraging the power of the firm's existing relationships for new fundraisings

4. Building new relationships



Keeping track of fundraising conversations

Real-time analytics built into an IR-focused CRM help you summarise your investor pipeline into an easily digestible overview. Your CRM is a central hub for all your important deal-related information. It supports the high-volume, relationship-driven nature of investing.
Dialllog CRM shows your fundraising relationships in a kanban view, highlighting the conversations that should be picked up
Centralise investor data.

Having all your investor data in one place where your team members can see it is one of the major benefits a CRM provides. A central database keeps your organisation on the same page, allowing users to leverage the information in every conversation they have. This is important in businesses where competition is intense, and you want to gain a competitive advantage through a personalised approach towards your investors. If all the relevant investor information is available at one's fingertips, the entire fund is prepared to communicate with each investor in the best possible way.

Managing existing/Building new relationships with LPs

For VCs, most of the key wins come from a very small number of key relationships. The main question is, which relationships are the most valuable?

The most integral and highest value task of any venture capital firm will always be linked to relationship building and improving relationships with existing investors (LPs). During the COVID-19 pandemic, relationship and deal management in venture capital shifted towards relying even more heavily on technology. Building new relationships with new LPs helps your firm grow, as you rely on warm introductions as your means of building this relationship.

Providing value

An investor relations CRM platform with analytics functionality directly supports investor pipeline management and data sharing with current investors. Reporting and analytics are also a way to showcase your experience and value to prospective investors.

The biggest value a CRM provides for venture capitalists is not from the volume of data recorded (even though this is also important) but from the ability to leverage relationship intelligence within the given data set. Each piece of information recorded in the CRM goes beyond the mere data point; it is a piece of a relationship. Valuable time should be spent on building and supporting those relationships, not manually entering data. Leveraging automated reminders along with the transparency that comes with an automated system enables teams that aren't together in one place to stay aligned on long-term goals for each relationship.

You're already preoccupied with large amounts of data at your disposal. This is where an automated CRM can enable you to spend more of your time where you add the most value. One of the most impactful technology initiatives for a VC firm is investing into a CRM that automatically deals with the heavy lifting needed to get the most value out of relationships.

What are the risks of using a CRM for Investor Relations?

It wouldn't be difficult to make a list of possible disadvantages arising from the implementation of a CRM. Instead, that long list can be summarised into a single element, since that is what will truly determine the success or otherwise of your initiative.

The effectiveness of a CRM mostly depends on its correct implementation, and the correct implementation, in turn, depends on a team that knows how to correctly use analytics, adapt the tool to the requirements of the company, and take the time needed to analyse and change whatever is necessary to optimise the results.
Some funds are concerned with the privacy of information. In case specific conversations should not be shared across the company because you work with sensitive information, ensure that the investor relationship platform allows access level management for individual users and restricts the visibility of certain dialogs.

Dialllog CRM allows restricted access to a specific dialog or project.

How to choose the right CRM that supports investor relations?

Your VC team must have one investor relations platform that supports building a full investor relations strategy. Several advantages come with having a CRM in your venture capital fund. For example, it helps to build new relationships and offers clear visibility into your investor pipeline, due diligence, investment management, email and calendar integration, KPI tracking and reporting, tracking fundraising, etc.

For your firm to regularly secure funding and remain competitive as more firms begin to compete for investment, you must consolidate and streamline the process you adopt for managing relationships with your Limited Partners.

Choosing the right CRM system can be overwhelming with the number of options available. The right CRM should not be separate from your startup sourcing CRM, because you don't want to switch from one system to another. Your CRM needs to bring all your ecosystem relationships into one platform and to build a map of all your activities and networks, allowing you to be more successful in raising funds and communicating results to the existing investors to drive your business forward.

That's why we created Dialllog, the best CRM for Investor Relations on the market that digitizes every area of the VC lifecycle, giving you a single, centralized source of truth.

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