Follow me

CRM Systems and Private Equity Deal Sourcing

Preqin and LexisNexis Enterprise Solutions just released a report on “CRM Systems and Private Equity Deal Sourcing”, based on a survey of 63 private equity funds.

They report that 84% of respondents claim to source over 20% of their opportunities through proprietary deal flow. Based on our research, I think that these respondents are taking a very liberal view of what constitutes “proprietary deal flow”.

The study also found that, “80% of participants stated that they already use a CRM system for relationship management, or would use it for this purpose if they were to invest in one.” I suspect that this is a very liberal definition of “CRM system”. EquityTouch found in a 2009 survey of 61 PE funds that 37% were using no formal CRM application; instead, they were typically using only Microsoft Outlook and Excel. I don’t consider those CRM.  The most popular CRM tools were: (17%); Act (15%); Saleslogix (7%); and Microsoft Access (7%). We should highlight another provider, Gust (formerly Angelsoft), which is by far the leading deal-tracking application for the angel network community, and also has over 100 VC clients. 

Given the congenital weakness of institutional investors in inputting and updating information, we think you should automate as much as possible the process. We have identified five ways in which investors can systematically add data to their CRM systems:

· Employee networks. One of the most powerful ways to get data within the CRM system is to use a relationship capital tracking tool, such as ContactNet’s Enterprise Relationship Management platform. These tools automatically spider through the emails, IMs, and other tools of a firm’s employees, in order to identify with which people the firm has relationships. Mike Ahearn, human resource partner at Boston-based VC firm Greylock Partners, reports that he finds these tools are a good way to find IT people who aren’t actively searching for work and may not otherwise come up on his radar screen.

· Business cards. We recommend using a card scanning tool such as those sold by Cardscan, IRIS, Neat, or Presto to incorporate this data into your CRM system.

· Data from email and files. A number of vendors sell tools which automatically suck in data from email signature files, web pages, etc., into your CRM system. This speeds up data entry by obviating retyping. Vendors include eGrabber, Gwabbit, GrabText, and Broadlook.

Get invites to exclusive events, jobs, and research.

· The cloud. We recommend setting up an automatic synchronization with some of the major public contact databases (LinkedIn, Spoke, Plaxo), which allows you to get current contact information.

· From the company directly, e.g., via a web-based application such as Angelsoft.

Most important is culture.  I know one PE fund where the manager has said that he evaluates the contributions of his team based on their activity in the CRM system.  If there’s no data in the CRM, that implies they’ve done no work, which implies no bonus.  Use of the CRM system at his firm is, understandably, very high. 

(Graphic courtesy of Gauravonomics)

Get invites to exclusive events and research.


  1. At Broadlook, we see Contact Capture as a critical data capture/parsing tool to streamline the movement of data to CRM. In addition, we see our VC and Private Equity clients need automation in their deal sourcing efforts when trying to generate company lists. SIC codes and traditional data sources are no longer reliable, Google and keyword searching is effective but far too slow. Use Market Mapper from Broadlook to speed up the generation of a niche company list (i.e. Endovascular Medical Device companies) to gain that competitive edge.