august, 24 / 2022 by Tyler Hart

The Rewards Of Modernising Your Venture Capital Deal Flow

When it comes to Venture Capital, deal flow is a key component and metric by which a firm's success is judged.

What is VC Deal Flow?

Venture Capital deal flow is the process by which a firm filters through prospective companies and the rate at which they accept or reject investing in them. Deal flow is a crucial factor in a firm's value and is often determined by the strength of its relationships and overall reputation when it comes to its investments and clients they work with.

What tools are used to manage Deal Flow?

"CRM allows one to find opportunities that may have otherwise been overlooked or never appeared in their deal flow pipeline"
Deal flow has many aspects to it. VCs receive leads from other funds, clients, advisors, online networking, and more that they need to filter through before the process of due diligence and investing even truly begins. It is no surprise then that many firms want to have the most efficient deal flow process possible and seek competitive advantages within the VC market. One such way of maximizing a firm's deal flow pipeline is CRM software that allows a firm to remain interconnected and on the same page through the use of an efficient platform.

What are the benefits of a CRM to manage Deal Flow?

"CRM allows one to find opportunities that may have otherwise been overlooked or never appeared in their deal flow pipeline"
By using a CRM, VC firms may keep all their data from emails and conversations with startups to portfolio management and investing activities in a single system shared among the firm's employees. By connecting all the teams within a firm, everyone remains on the same page and eliminates many of the headaches of using many different systems across departments.

Instead of one person using Word, another using Google sheets, and another using Microsoft Outlook, CRMs eliminate such clutter and significantly streamline the deal flow process by combining these platforms into one. This has been a major focus over recent years as the importance of modernizing a firm's workflows increases due to the highly digitalized and globally interconnected nature of today's work environment.

Furthermore, with modernization comes opportunity, as the return on investment for CRM-using firms is highly positive and has granted firms the ability to find opportunities that may have otherwise been overlooked or never appeared in their deal flow pipeline. In fact, "CRM delivers an ROI of almost 245%", an undeniable incentive for implementing it in a VC firm's daily life.
"Using CRM software could decrease huge amounts of time"
As a result, the days of VC investors spending all day at long conferences is no longer the future. Instead, through software and online social networking platforms, firms may reach farther and wider than ever before in the search for the next great startup. With so many new startups today, narrowing down these options is a crucial component to having an efficient firm deal flow. Harvard business review states that " on average, out of 101 opportunities… only one will actually be funded." and that "A typical deal takes 83 days to close, and firms reported spending an average of 118 hours on due diligence". With such time-consuming processes for deciding on investment and so many companies to sift through, seeking modern solutions to revolutionizing deal flow is undoubtedly the way to move forward if a firm wants to maintain a competitive edge.

Using CRM software could decrease huge amounts of time used on things like due diligence as it would be far more collaborative and allow those analyzing a potential investment to reduce redundancy by building off each other's insights. Additionally, suppose only a handful out of every 100 companies even makes it to the due diligence step of deal flow. In that case, it is essential not only to determine companies suitable for investment efficiently but also to remain organized in getting there by keeping all the firm's research data within a single system.

Every hour taken off such processes and each redundancy eliminated eventually adds up over time and can significantly shorten a company's deal flow process compared to its competitors. As a result of such benefits, a majority of companies are digitalizing their deal flows through intelligent software systems. This is partly because currently, "73% of employees spend between 1-3 hours looking for a particular piece of information". Fortunately, such wasted time can be eliminated with a CRM platform that is capable of organizing a myriad of VC information in one place.

Dialllog CRM allows automating workflow bringing communication, KPIs and pitchdecks in one place
"73% of employees spend between 1-3 hours looking for a particular piece of information".

How online presence can help?

"the faster and smarter one can work, the better their deal flows will be"
Beyond CRM in the digital age having a solid online presence is a crucial part of staying ahead of the curve and maintaining a healthy deal flow for a firm. This can be done through online networking on business platforms like LinkedIn, connecting with industry experts, and seeking their opinions and referrals. This has never been easier as now anyone anywhere is a click away, providing a myriad of exciting new venture opportunities. If successful in this undertaking, firms can work their way into a position of prominence and achieve a much higher quality of deal flow.

Ultimately, the path towards modernizing a firm's deal flows is to increase its technological capabilities and interconnectivity and achieve a robust virtual presence with a substantial list of advisors. Doing so will provide undoubted benefits, with firms using CRM managing more deals and earning higher profits. Overall in the digital age we live in, the faster and smarter one can work, the better their deal flows will be, and as a result, they can achieve higher returns with generally less complicated systems.
If indeed CRMs are the end-all solution that brings greater profits, why are there still issues?
The reason lies in the fact that no existing CRM truly combines all of a firm's deal flows in an efficient manner. That is why Dialllog was created. Dialllog seeks to overcome this pain point by integrating all aspects of a VC firm into one digitized source of information.

Firms using Dialllog have all aspects of their VC lifecycle in one centralized and interconnected source, allowing them to work smarter and more efficiently. If you are interested in seeing the exciting possibilities Dialllog offers, book a live demo today.

What is Dialllog?

Dialllog is the first project-based Venture Capital CRM software designed specifically for VC funds to manage the full investment cycle.
No more endless Excel spreadsheets, docs, notes and emails. Dialllog brings all the sporadic information into one VC software to create data-driven workflows.
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