Knowledge is power, and Venture Capital firms need constant access to high-quality information to stay on top of the game. When looking for the perfect opportunity to put the money on, one shortcut in due diligence can lead to losing investor money. Therefore, carrying out due diligence on a potential company is crucial, but it’s not always that easy. For each deal, a Venture Capital fund invests in, it considers on an average 80-100 potential investment opportunities. Since a typical deal can take months to close, there’s a lot to manage for the investment teams. To streamline this large volume of incoming deals and manage the due-diligence process efficiently, Venture Capital firms are now ending their reliance on Excel-based data management and moving to Venture Capital Deal Flow Management Software.
There have been claims that the global market for CRM software is now the largest. However, Venture Capital deal management is a different ballgame altogether as generic CRM solutions do not serve the dynamic requirements of this niche industry. Hence, Venture Capital Deal Flow Management Software designed with a focus on the specific requirements of Venture Capital firms have come as a sigh of relief for the venture capital investment teams. These solutions offer all the capabilities to replace offline notes, workbooks, email-based processes, and tracking. A major challenge for the venture capital investment teams has been to manage multiple deals at different deal stages. The new-age Venture Capital Deal Flow Management Software have precisely attempted to solve this by offering structured workflows that empower the investment teams to keep a track of the deal’s progress through the pipeline and pick up exactly from where it was left. Another benefit of Venture Capital Deal Flow Management Software is their ability to facilitate collaboration between geographically split teams that allows them to track all communications, and tasks with respect to any deal in a centralized manner.
Evaluation of deals (and due diligence) is another area where Venture Capital Deal Flow Management Software are adding huge value. Various new-age solutions like PE Front Office, offer seamless integration with third-party data systems and other software, that enables investment teams to easily pull vital and relevant data for new and active deals within their deal pipeline eco-system. These solutions can also integrate with email clients (Microsoft Outlook or Gmail) via add-ins that allow the investment teams to initiate emails, manage calendar events, file attachments through their email inbox and update the deals automatically. Further, with integrated analytics investment managers can efficiently compare deals across various parameters and better evaluate with a single click of a button. Venture Capital Deal Flow Management Software also offers integration with tools that help to quantify trends, source statistical data for multiple regions, and relevant news coverage to offer critical sector updates, thereby, leveraging technology to remove systemic frictions and offer better deal evaluation and funding process. On top of all these benefits, the biggest advantage of using Venture Capital Deal Flow Management Software is that investment teams can now ensure that there’s a single source of truth and team members are always aligned.
Authored By: Drishti Singh (Assistant Manager – Sales & Key Accounts, PE Front Office)