A Guide to Choosing The Best Private Equity CRM Software

Choosing the best PE CRM

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, etc., the more you can improve your deal flow 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 unique needs of a private equity firm.

Selecting the right CRM is crucial for your organization to maintain a competitive edge.

The CRM you choose should increase your team’s productivity by eliminating manual data entry and give you the visibility to accelerate the deal-making process, allowing you and your team to spend time building meaningful relationships and closing deals.

The reality is that most private equity firms still rely on outdated tools like Excel spreadsheets and generic contact management apps.

Even though some firms use CRMs, they utilize systems designed for managing traditional linear sales processes, which is very different from the long-term collaborative relationships you are trying to build as a private equity investor.

Today’s CRM market is saturated with choices ranging from lightweight cloud-based systems with limited functionality and price tags of under $20 per user per month to complex, highly customizable on-premise solutions selling for thousands of dollars.

However, most of these systems have not been designed for the private markets or relationship-focused industries. Instead, they are transactional tools designed to help sales professionals move prospects down a sales funnel.

Managing relationships with limited partners, asset management firms, executives, and experts is very different from managing relationships with prospects looking to buy a good or service from a company.

To set your firm apart from the competition, you need a CRM system with the intelligence to analyze the data across your firm’s entire network, not just a contact management solution to store interactions and contact information.

Enter the private equity CRM. A system designed to streamline inbound and outbound deal origination, due diligence, and optimize the entire deal lifecycle. These industry-specific platforms will save you hundreds of hours per year by automating time-consuming tasks like data entry while leveraging the power of your firm’s relationship networks to uncover new opportunities and get warm introductions.

A private equity CRM will serve as your firm’s single source of truth, housing all the information associated with a particular deal, including emails, meeting notes, updates, and data points. This way, your team will know the status of every deal in real-time and will prevent you from losing investment opportunities to siloed data and miscommunication. Furthermore, you will no longer spend hours entering data, creating profiles, looking for information, searching for the historical context of existing relationships, etc.

With dozens of vendors offering similar features, navigating the CRM market can be overwhelming.

This article will shed light on the most popular CRMs used by private equity firms to help you better understand the features and functionality you should look for when evaluating CRM software for your firm.

 

DealCloud

 

DealCloud is a cloud-based legacy CRM system designed for the capital markets. Private equity, hedge funds, real estate investors, and other financial services firms across asset classes use DealCloud as their CRM to track deal flow, portfolio management, and manage relationships.

As with other CRMs lacking relationship intelligence, you must devote time to manually keeping data clean & organized and ensure your team constantly enters contact, interaction, and deal data directly into the system. On the other hand, modern private equity CRMs with relationship intelligence automatically create and enrich profiles with 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 deployments lasting a few months.

Once the system has been configured, most changes and customizations need to be handled by the DealCloud team, adding an extra layer of complexity.

Common complaints from DealCloud users include:

– The need to manually enter data

– Their outdated user interface (UI)

– A steep learning curve

A different provider might be a better choice for your firm if you are looking for a more agile CRM platform that you can deploy in less time without needing expensive customization work or professional services.

 

Altvia

 

Altvia is a web-based platform that works on top of Salesforce.

PE firms and other alternative investment organizations rely on Altvia to organize deal flow, track their fundraising process, monitor portfolio companies and manage LPs 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 due diligence 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 true relationship intelligence CRM. It cannot analyze your firm’s relationship network to uncover new opportunities and provide you with real-time alerts on your network. If you want to uncover your network’s power, you’ll have to look elsewhere.

 

Salesforce

 

Salesforce.com (SFDC) 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 to support a linear sales process. 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 of its complexity, you might face some reluctance from your team when asked to use Salesforce as their CRM.

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 which would add extra cost and make your deployment lengthy and costly compared to other 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 compared to 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, making your team spend more time on admin work and less time building relationships and sourcing new opportunities. If your firm uses Salesforce and wishes to remain with them, 4Degrees can integrate with it to activate your relationship network to uncover more opportunities and eliminate data entry.

Affinity

 

Founded in 2014, Affinity is a relationship intelligence 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. This way, every interaction is tracked, and users don’t need to spend time looking for a specific piece of information about a deal or contact.

Although it is a capable product, Affinity falls short of providing users with news and updates about their networks, making 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.

Other common complaints from users include the need to purchase additional add-ons to get full access to the analytics capabilities and an elevated price point compared to other similar products.

 

Dynamo

Dynamo is a highly customizable alternative asset management end-to-end platform used by private equity, investment banking, and other investment firms to manage contacts and investor relations. Dynamo is not a dedicated CRM company, and 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. As with other private equity CRM solutions on this list, 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 PE dedicated CRMs.

If you are looking for a PE CRM system and don’t need the back office functionality, look for another solution.

 

4Degrees

 

4Degrees is a relationship intelligence CRM platform built by ex-investors for the private markets and other relationship-focused industries.

The 4Degrees platform eliminates busywork by integrating into your firm’s existing workflows and automating time-consuming processes, including data entry.

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. By automatically capturing all your interactions by syncing with Microsoft Exchange and Gmail and enriching contact data, 4Degrees serves as your firm’s single source of truth, ensuring your whole team is on the same page.

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—providing you access to the data you need to make the right decisions.

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 your build stronger relationships, 4Degrees alerts 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.

The pages below provide a more detailed comparison of 4Degrees vs. other CRMs used by private equity teams.

4Degrees vs. Affinity

4Degrees vs. DealCloud

4Degrees vs. Monday

 

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 understands your unique needs. Spending time and money trying to adapt a CRM platform designed for a transactional sales process does not make sense for your private equity firm.

If you are interested in leveraging your firm’s most valuable asset by fully cultivating and harnessing the power of your team’s business network, you should request a personalized demo of 4Degrees; the only Relationship Intelligence CRM built for investors by ex-investors.

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