Building and maintaining deep relationships is crucial to your success as a private equity investor.
The stronger your relationships with C-level executives, bankers, fund managers, venture capital firms, and other stakeholders are, the more you can improve your deal flow and find new investment opportunities while adding the most value to your firm’s portfolio companies.
But relationships don’t just happen automatically; they must be nurtured, tracked, and followed up on. To effectively manage and get the most value from your relationship network, your organization needs a customer relationship management (CRM) platform designed explicitly for the specific needs of a private equity firm.
Most private equity firms still rely on outdated tools like Excel spreadsheets and generic contact management applications instead of adopting scalable software solutions created specifically for private equity investors.
Your CRM system should serve as your firm’s data management, deal-sourcing, and pipeline management system. It should accelerate and optimize the deal-making process and eliminate manual data entry and other time-consuming tasks. This will allow you and your team members to make informed decisions and spend more time building meaningful relationships and closing deals.
With dozens of vendors offering similar CRM tools, navigating the private equity CRM market can be overwhelming.
This article will illuminate the most popular CRMs used by private equity firms in 2024, helping you better understand the features and functionality you should look for when navigating the CRM ecosystem and evaluating multiple vendors. This knowledge is essential for effective decision-making when selecting a CRM that meets your firm's specific needs.
Let’s get started.
DealCloud
DealCloud is a cloud-based legacy CRM system designed for the capital markets. Private equity, hedge funds, real estate investors, LPs, and other financial services firms across asset classes rely on DealCloud as their CRM to manage business development, track deal flow, manage portfolios, and manage investor relationships.
As with other deal flow management platforms lacking relationship intelligence, you must devote time to manually keeping data clean & organized and ensuring your team constantly enters contact, interaction, and deal data directly into the DealCloud system. On the other hand, modern private equity CRMs with relationship intelligence automatically create and enrich profiles with high-quality data from third-party sources, saving your team hundreds of hours per year.
Due to its size, deploying DealCloud can be expensive and time-consuming, requiring a fair share of manual work and data uploads. A significant advantage is that DealCloud can be customized to meet your firm’s needs, but this customization can lead to expensive deployments lasting up to 6 months. Once the system has been configured, most changes and customizations must be handled exclusively by the DealCloud team, adding extra cost and a layer of complexity.
Pros
- Industry-Specific Design: built for private equity, ensuring its features align directly with industry needs.
- Customizability: The platform is highly customizable, allowing firms to tailor it to their unique requirements.
Cons
- Learning Curve: Given its comprehensive suite of tools, new users face a steep learning curve.
- Integration Challenges: Setting up integrations with specific third-party tools requires additional development work.
- User Interface: Some users consider the UI/UX antiquated and hard to use.
- High Cost: Compared to other options, Dealcloud can be expensive, + firms would need to budget extra for any customization work that might be required.
A different provider might be better for your firm if you want a more modern, easier-to-use, agile CRM platform that can be deployed quickly without needing expensive customization work or ongoing professional services.
Altvia
Altvia is a web-based CRM built for alternative investment firms built atop Salesforce.
PE firms and other alternative investment organizations rely on Altvia to organize deal flow, track their fundraising process, monitor portfolio companies, and manage limited partners and investor relations.
On the CRM side, Altvia is similar to other traditional CRMs since it lacks relationship intelligence and relies on manually entering data instead of automation and enrichment.
The Altvia CRM allows firms to track their deal pipeline and streamline the due diligence process by relying on customizable checklists for different stages of the evaluation process. From a reporting standpoint, Altvia enables users to create custom reports and dashboards to track deals, deal flow sources, valuation trends, and other types of analysis.
Unfortunately, Altvia is not a relationship intelligence CRM. It cannot analyze your firm’s relationship network to uncover new opportunities or warm introductions and provide you with real-time alerts on your network. If you want to uncover the power of your team’s network for deal sourcing, due diligence, portfolio support, etc., you’ll have to look elsewhere.
Pros
- Industry-Specific Design: Tailored to private equity and alternative investment sectors.
- Dedicated Support: Altvia’s support team is well-versed in the challenges private equity firms face.
- Robust Data Analytics: Altvia offers powerful tools for firms to derive actionable insights and make data-driven decisions.
Cons
- Learning Curve: New users might face a steep learning curve, especially those unfamiliar with the Salesforce interface.
- Lack of Integration with Other Tools: Integration capabilities with third-party tools are limited or require additional customization, which carries an extra cost.
- High Cost: Some firms might find Altvia’s pricing high compared to other options in the market.
Salesforce
Salesforce.com is the largest and most well-known CRM platform. As the pioneers of cloud-based CRM, companies across all sizes and industries rely on Salesforce for their CRM and other software needs.
Unfortunately for PE firms, Salesforce is a transactional CRM designed for transactional sales teams moving prospects down a sales pipeline.
Due to its size and breadth, most private equity firms find Salesforce very complex for their needs. Plus, you would pay for functionality you do not need, such as customer support and marketing automation modules. As a result, your team might be reluctant to use Salesforce as their private equity CRM software.
Using Salesforce as a private equity CRM requires extensive and expensive customization from a third-party Salesforce partner or consultant. Most customization work would need to be complemented by a personalized training program, adding an extra layer of complexity and cost and making your deployment lengthy and costly compared to out-of-the-box solutions.
When working with a Salesforce consultant to customize the system, you will also need to budget for any additional enhancements or changes that need to be done once the initial implementation has been completed.
If your firm has a team dedicated to managing and customizing your Salesforce CRM, there might be a case for using Salesforce instead of other " out-of-the-box” private equity CRMs. As the most widely used CRM, thousands of integrations in the Salesforce AppExchange allow you to integrate with other tools in your technology stack.
Like other CRMs on this list, Salesforce still relies on manual data entry, which means your team spends more time on admin work and less time building relationships and sourcing new opportunities. If your firm uses Salesforce and wishes to remain with it, 4Degrees can integrate with it to activate your relationship network, uncover more opportunities, and eliminate data entry.
Pros
- Highly Customizable: Salesforce is known for its customizability, allowing firms to adapt it to their unique operational requirements.
- Integration Capabilities: Salesforce’s ability to integrate with various third-party tools and data sources ensures a streamlined workflow. Including 4Degrees for relationship intelligence.
- Scalability: Salesforce can cater to small and large firms, scaling its functionalities as it grows.
Cons
- Customization Requires Expertise: Making significant changes or setting up complex integrations might require expensive technical expertise.
- Lack of Expert Support: Salesforce support staff are not well versed in private equity or PE firms' common challenges.
- Steep Learning Curve: It requires substantial training for users to harness its capabilities fully.
4Degrees
4Degrees is a relationship intelligence CRM platform built by ex-investors exclusively for firms in the private markets.
As a full-featured CRM, 4Degrees allows your team to visualize your deal pipeline in a list or Kanban-style view, keeping you updated on the status of every deal from across the entire lifecycle from origination to close. By automatically capturing all your interactions by syncing with Microsoft Exchange and Gmail and enriching contact data with high-quality data providers such as Pitchbook, 4Degrees serves as your firm’s single source of truth, ensuring your whole team is on the same page.
Additionally, the platform’s workflow automation features allow firms to punch above their weight by automatically creating contact and company profiles, eliminating manual data entry, and integrating into your firm’s existing workflows to automate other time-consuming processes.
To quickly surface insights and drill into data, 4Degrees includes a reporting and analytics engine that provides real-time snapshots of key metrics, including relationships, fundraising, and deal progress. This provides you with access to the data you need to make the right decisions throughout the entire investment lifecycle.
The platform’s relationship intelligence capabilities analyze the strength of your team’s relationship networks to surface warm introductions and identify the best path to a company, expert, or investor in seconds.
To help you build stronger relationships, 4Degrees has notifications that alert you when members of your network have made investments, changed jobs, or other signals that help you stay abreast of your network, nurture relationships, and source new opportunities.
4Degrees includes a mobile app for iOS and Android devices to ensure you always have access to your network.
The pages below provide a more detailed comparison of 4Degrees vs. other common CRMs used by private equity teams.
Affinity
Affinity is a deal management and CRM platform built for deal-driven firms to automate data entry, manage their relationship networks, and track their organization’s deal flow pipeline. Using proprietary technology, Affinity provides teams with a deeper understanding of their network to source new relationships and deals.
Affinity claims to save investors hundreds of hours per year that would otherwise be spent on manual data entry by automatically plugging into Gmail and Outlook and exporting email content into contact and deal profiles.
Although it is a capable product, Affinity falls short of providing users with news and updates about people in their networks. This makes it hard for investors to stay engaged with their contacts and build deeper relationships.
Unfortunately, Affinity has been known to be very liberal in sharing your firm’s data and does not give users complete control of how their data is shared.
Pros
- Automated Data Capture: Automatically capture data, reducing manual entry and ensuring accuracy.
- Customizable: Offers a degree of customization, allowing it to cater to the specific needs of different industries and teams.
Cons
- Learning Curve: While designed to be user-friendly, those new to CRM platforms might face a learning curve
- Integration Limitations: While it offers integrations, it might not seamlessly integrate with all third-party tools PE firms use, potentially requiring additional tools.
- Pricing: Expensive compared to similar solutions might be a barrier for smaller teams.
Dynamo
Dynamo is a highly customizable alternative asset management end-to-end platform used by private equity, investment banking, and other investment management firms to manage contacts and investor relations. It is not a dedicated CRM company; its CRM capabilities are part of a broader feature set that includes back-office applications.
For PE firms looking for a CRM to track their deals and leverage their relationships, Dynamo can be a cumbersome tool with extra functionality some firms might not need. Like other private equity CRM solutions, Dynamo relies on manual data entry to maintain up-to-date contacts and activities.
As a complete end-to-end platform, Dynamo integrates with some popular SaaS tools PE firms use, but options are limited compared to other more modern Private Equity CRMs.
If you are looking for a PE CRM system and don’t need the back office functionality, look for another solution.
Pros
- Holistic Solution: From investor relations to deal tracking, Dynamo offers a comprehensive suite of tools, eliminating the need for multiple software solutions.
- Customizability: Offers customization options, enabling firms to adapt the platform to their specific operational requirements.
- Dedicated Support: Offers extensive support, ensuring users can quickly address any challenges.
Cons
- Not Specialized: Due to its multiple use cases, Dynamo does not have the most robust CRM functionality.
- Updates and Changes: As with many platforms, frequent updates require users to adapt and relearn certain functionalities.
- Pricing: Given its diverse feature set, Dynamo might come at a premium price.
eFront
eFront offers a suite of features tailored to the unique demands of the alternative investment industry. From comprehensive portfolio management and robust risk assessment tools to transparent investor reporting, advanced data analytics, and seamless integration capabilities, eFront ensures that every facet of alternative investment is covered.
Acquired by BlackRock in 2019, eFront has further solidified its position in the market, leveraging its parent company’s vast resources and expertise to cater to its clientele’s evolving needs.
Other CRMs
This guide reviewed the leading CRM platforms private equity firms use. Other common platforms include Hubspot, which is focused on inbound marketing and marketing automation, and Microsoft Dynamics, designed for firms that rely on other Microsoft enterprise applications.
By onboarding a CRM not designed for private equity professionals, you risk spending considerable time and resources explaining your specific use cases to their implementation teams, who lack expertise in the private equity industry. On the other hand, by working with a team of former investors who understand the private equity business model and use cases, your firm will start getting value from your CRM much faster.
Finding the Best CRM For Private Equity
In an industry where relationships are your most valuable assets, you need a CRM backed by a team that has previously been there and understands your unique needs. Spending time and money trying to shoehorn and adapt a CRM platform designed for a transactional sales process does not make sense for your private equity firm.
If you want to leverage your firm’s most valuable asset to find and close more proprietary deals while automating time-consuming processes such as data entry, you should request a personalized demo of 4Degrees, the best private equity CRM and Relationship Intelligence platform built for investors by ex-investors.
