Why not using a CRM as a small VC firm is a mistake!

My job is to solve pain points for Venture Capital firms. Obviously I meet many VCs that consider themselves too small to use a CRM tool. I believe it’s a mistake that can set you for failure.

WHY NOT USING A CRM WILL SET YOU FOR FAILURE

1) You believe that using email, whatsapp, dropbox and Excel is enough for your small team to manage all the deals.

The truth is you will have more deals than you can handle as a small team. Very soon you will lose track of the startups you meet, you will take more and more time to reach out to founders and you will do less proactive followups.

Without even noticing, the number of startups you can screen is lower. The direct impact consists in the decrease of the number of investments that you do. Consequently, you finish by wasting valuable time searching for data in emails that have 10s of threads. If you keep saying you’re busy all the time, that has a lot to do with the fact that you spend too much time on admin.

2) You believe that investing in a CRM solution is expensive

Seeing your management fees spent on tools sucks. I couldn’t agree more. There are always better way to spend that money, right?

I believe VCs primary goal when searching for a CRM should be “what’s the value I am going to get out from this”. A CRM or a software for VC is already replacing several tools you are already paying for. Additionally, it spares you time!!! Is there something more valuable in your personal life or job than TIME?

In my company, we measured the impact of using a CRM with different VC firms across the world. It appeared that the annual cost of our software is amortized in less than a month. That’s why I strongly recommend to focus on VALUE rather than on the expense you are going to make.

3) You think process is not relevant yet

Setting up a process in your company ensures clear communication, team work and approaches you faster to your goals.

Along the time, we had the opportunity to work with many VC firms that were using only spreadsheets. Until they said STOP, there must be something that could help us manage our deal flow easier. Now they have a process, a centralized database and they can automate many tasks such as :

  • data entry from email, crunchbase, submission forms
  • preparing powerpoint presentations for partner meetings
  • task follow-ups
  • export a profile of a company and share it with a peer investor
  • real-time statistics of their pipeline

The main pickup from this article is that YOU SHOULD FOCUS ON VALUE. The rest doesn’t worth your time.

Thank you very much for reading!

I would love to hear your thoughts on why VC firms make the mistake of not setting up a CRM/software for VCs from the beginning.

Share: