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What is the Best CRM and Marketing Tech Platform for a New Private Equity/Venture Capital Fund?

One of the first decisions we had to make in setting up our new VC fund, Versatile Venture Capital, was our CRM and marketing technology infrastructure.  

I’m very interested in the tech stack of private equity/VC firms, both to improve the efficiency of Versatile VC and also as a focus area for our investing. I run PEVCTech, a community focused on this area.

I discuss here the tech stack we used historically; our decision criteria for our CRM and marketing tech providers; the CRM/martech landscape for private equity and VC firms; and some implications for VCs as investors. 

After extensive research, we centralized on HubSpot and deprecated Salesforce, Hootsuite, Calendly, Mailchimp, Contacts+, and Zapier. If you can, I recommend join HubSpot for Startups, which offers generous discounts.

The main reasons:

First, all-in-one functionality. HubSpot replicated all the major functionality we were using from all the CRM/martech tools I just mentioned. We were only paying for Zapier in order to pull business cards into Salesforce.

Second, high-quality customer service. We’ve been impressed by the alacrity, communication skills, and high level of competence of the customer success team, who have to support a lot of custom functionality we’ve built.

Third, a modern backend. It’s a pleasure to work with HubSpot, which is notably more responsive (in both senses of the word) than some of its competitors. 

Fourth, easy no-code customizability. For example, we’ve created workflows for automatic cleaning and standardizing of certain data fields.

Lastly, interoperability. HubSpot makes it easy to sync data as needed, or set up certain triggers for action, with other SAAS tools. Like Salesforce, HubSpot also has a significant (albeit smaller) network of integration partners. This is critical for us, because our CRM will be the backbone of our entire tech stack

Ideally, we were looking for a one-stop-shop combination of a classic sales-oriented CRM (e.g., Salesforce) and a marketing platform (e.g., Hootsuite). However, given that investing is driven more by person-to-person relationships than by brand-to-many relationships, if forced to choose our bias was a CRM with marketing plugins, as opposed to a marketing platform which might be useable for sales purposes. Kevin Lee, Executive Chairman, Didit, and CEO, eMarketing Association, observed, 

Investors [and founders] will follow a power-curve, like any other data set. If you keep all your relationships in one place, then you’ll need to use tags or another identifier to isolate the folks that really matter to you. These will also be higher touch (personalized touch, not batch and blast) than the rest of your database.  So, having a good way to keep those highly important people top-of-mind AND to chronicle your last touchpoints (including social media touchpoints) is really important.”

HISTORIC TECH STACK

Our historic salestech and marketing tech stack was:

  • CRM: Salesforce. I’ve been my own Salesforce admin for over a decade.
  • Marketing/social media: Hootsuite (social media management), Mailchimp (email list and audience management), and Google Suite. 
  • Email client: Superhuman, expensive but worth it.
  • Import of data from business cards, signature files, etc.: Contacts+ (Fullcontact spinoff), for scanning business cards; syncing data; and auto-updating. We used Zapier to pull this data into Salesforce. 
  • Sharing decks: Docsend. HubSpot doesn’t allow blocking of downloads and Docsend does, so we continue to use them. 
  • Email deliverability monitoring: URIPorts, where we send our DMARC reports. 

Simultaneously, we’ve been coordinating firm-wide data across far too many silos, listed below in descending order of importance:

  • Google Contacts. Incidentally, the fact that I’m using all these vendors and still had to move to a new CRM is a sign of how little effort Google has put into the Contacts product.
  • Google Calendar + Calendly + Zoom: All of our meetings flow through one or typically all of these tools.
  • Linkedin: Versatile Venture Capital / David Teten personal
  • Salesforce: 19,700+ people with 30+ custom fields.
  • Communications tools: Slack, Facetime, WhatsApp, Skype, Wechat, NFX Signal
  • Mailchimp: email lists for VersatileVC.com, Teten.com, and PEVCTech.com
  • Twitter: @Versatile_VC / @dteten
  • iPhone address book
  • AngelList: VersatileVC / David personal
  • YouTube. We upload videos occasionally from conferences.
  • Facebook.  I’m not active on Facebook at all, but we do have a business page we manage passively. 
  • Instagram, Snapchat, and TikTok. We maintain these accounts for R&D, and so my kids think I am less uncool. We’re minimally active there. 

DECISION CRITERIA

Our most important criteria included, in roughly descending order of priority:

We needed to incorporate the major functionality of our existing tools.

We wanted to pull in as much data as possible about all the people we interact with from the silos above. For example, we wanted a one-click link to the Linkedin profile and online presence (Google search results) of any relationship.  Shubham Goel, co-founder, Affinity, said, “From what we see at Affinity, this is usually the #1 question new managers are asking — how do I get everything in one place with as little admin work as possible? Usually small funds have fewer resources, so the more that can be automated, the better.”

We get data from:

  • plain text, e.g., a ‘contact us’ page on the web, or an email signature file
  • social network profiles (e.g., a LinkedIn page)
  • paper business cards (when social distancing hopefully ends).
  • individual emails, e.g., “I just changed jobs and here’s my new contact info” 

Ideally the system should be smart enough to auto-update, e.g., we scan a business card, and the system knows that we already have the person in my database, but he or she just changed jobs. HubSpot’s merge functionality accomplishes this goal.

Ideally, we want to configure the CRM such that once a week, we get a list of all material changes to the contact information of all the people in the CRM, based on their social media data, email bouncebacks, etc. Once a contact owner clicks ‘approve’, all those changes are synced. Potential vendors who can help with this: InsideView, ZoomInfo, and Clearbit.  

Any sales process involves a lot of repetition, so we needed to be able to build a library of template emails, shared across all team members.

We also wanted tight integration with our email client (Superhuman (best) or Gmail, including pixel tracking of when emails were opened. This is important for two reasons: to inform followup calls on people we are approaching; and to improve email deliverability. Since we’re emailing from a newly registered domain, Versatilevc.com, we have higher risk of being blocked in spam filters. Note we’re looking to optimize deliverability for manually-created one-to-one emails, not just our newsletter.  My personal emails are of course far more important than the bulk emails. 

We view the CRM as the backbone of long-term tech stack, so it was important to us that we had maximum flexibility to build on and customize the platform, including our reporting functionality

Another key test: we had to be able to access all data from within our workflows, e.g., in the browser, mobile, or Linkedin. We were surprised at the incomplete access some providers gave us when we tried to look at data on mobile.

Price was definitely a consideration. But to quote my wife, “we’re not rich enough to buy cheap.”

We wanted a searchable differentiation between different tiers of closeness. Some firms (e.g., Affinity) automate this. You can also proxy it by looking at frequency of interaction and length of replies, to distinguish between friends, colleagues, relationships (met once), acquaintances (only met via email), and audience (on my mailing list, or someone who follows me on social media). When we look in the CRM for “Who works at Company X”, 99% of the time we only want to know about people with whom we have had some substantive interaction. That said, it is helpful to have a record that we corresponded with a given person at least once. I regularly find myself looking in my email archives for all past correspondence with a given individual. There’s a lot of value in pulling in all of our correspondents into a CRM, but only if most of them are tagged as “acquaintances” so they don’t make the database unwieldy. I ended up building some custom workflows to do this in HubSpot.

We looked for systems which used tagging as their core data model, instead of categorization. The same person can be an LP in one fund, an LPAC member in a different fund, and a portfolio CEO. We need flexibility to cover a person’s many hats. Not all CRM systems enable this. For example, Connor Jeffers, CEO, Aptitude8, observes, “You can’t relate a HubSpot deal or contact to multiple companies. This is fine for most businesses and needs, but can be a constraint for some companies that use more complex data models.”

Ideally, we wanted to pull in data from outside databases, including data about limited partners and more broadly the startup ecosystem (e.g., from AngelList, Gust, or Kite). I’ve found numerous platforms which pull in data about institutional LPs from Preqin and other vendors. We haven’t found a good system for pulling in data about family offices investing in VC, although a number of vendors are focusing specifically on automating the fundraising process.

Lastly, we wanted workflow management capabilities, e.g., reminders both to engage contacts regularly, and to move deals forward. Long-term, the system we’re building (which we had set up at some of my prior firms) will automatically create folders for all new investments we’re considering, where we can store all associated transaction data, due diligence, etc. We are setting up the following process: every time a company mails us their pitch or further information, we send to a special email, e.g., inbound(@)versatilevc.com. We tag each email appropriately:

  • NNTR=No Need to Respond
  • RRM=Draft a response for me
  • RR=Analyst reviews and assesses personally
  • RRTL=Read & review the list, no need to respond to any particular company. E.g., this is for when another VC sends us a list of their portfolio companies.

The system creates a new folder for each company, and assigns someone internally to process that inbound. All emails and all attachments from the founder are stored and time-stamped in a specific folder, which is synced with Google Drive. If an investment progresses, we use the same folder for correspondence with counsel and others.

Oliver Sholder, Managing Partner, Everpeak Partners, summarized the core objects we need to manage as follows:

  • Leads – early stage investors, or companies that I’m considering investing in
  • Contacts – people
  • Accounts – businesses & organizations
  • Opportunities – “opportunities for investment” which would include an amount, expected commitment date and other sales details

One of the resource I’ve found helpful in reviewing this space is IT Central Station, a product review site and buyer community. It helps me to discover new vendors and weed out the ones with poor reviews.  It’s also helpful for identifying people with whom we can do reference checking.

COMPETITIVE LANDSCAPE

Based on conversations with Ablorde Ashigbi, CEO, 4Degrees; Ben Harrison, President, Financial Services at Intapp and Founder, DealCloud; and others, we classify the relevant vendors into five buckets:

1) Traditional Sales-focused CRMs: Microsoft Dynamics, Salesforce, Nimble, SugarCRM, Insightly, Infor CRM, Pipedrive, and Zoho serve a very broad audience and so have a robust ecosystem: mass emailing, sequences, deep native connectivity to other tools. Many smaller players can replicate this ecosystem through a combination of Zapier integrations and APIs, but would require more setup than the aforementioned. Unsurprisingly, up and coming vendors like Affinity are building out their ecosystems, e.g., Affinity’s Integrations Hub.

Tim Friedman, Founder, PEStack, and a Venture Partner with Versatile Venture Capital, said, 

“We see more variation in satisfaction between different customers of the same platforms in the front office space than any other area we cover. If we do a front office selection process, the first thing we do is examine the existing solution and invite the existing provider to pitch re-implementation as a potential solution. This effect is especially true when we see generalist CRMs, most often Salesforce. The best predictor for failed Salesforce implementation is whether or not the firm uses a consultant with real experience of private equity to setup and maintain the platform. Many of the very biggest firms use Salesforce very happily, and if you’re using a specialist such as Cloudtheory which ‘gets’ private equity, you can achieve great results. If you try and do it yourself or use a generalist consultant, you’re taking a big risk.”

Jacob Rogelberg, Director of Product at Context 365, says, 

“As someone who’s lived through two Salesforce implementations (and don’t wish this pain upon anyone), I recommend using Salesforce when the org is large enough and has the resources to commit to a 1 year implementation process. The ROI isn’t there for smaller companies; there are $1B PE funds that run on nothing other than Excel and Outlook. At Context 365, we use a combination of Salesforce & HubSpot to ensure we’re reaching out to the right leads and customers at the right time.”

2) Marketing tech platforms which have a sales-focused CRM capacity to some extent, e.g., HubSpot, Mailchimp and Mixmax. Salesforce offers Pardot, a company they acquired. 

3) Email-focused CRMs: Streak and Copper do the best job of keeping the entire experience within the Gmail inbox. If someone is adamant about never leaving that experience, I would point them in this direction.  A number of players (e.g., 4Degrees, Salesforce, Affinity) have built out strong Chrome extensions that allow you to add and edit deal information, search through contacts and other capabilities right from Gmail, but not at the same level as Streak. Several vendors (e.g., Affinity, 4Degrees, Dealcloud) have similar functionality in Outlook. 

4) CRMs focused on finance/investment management. Among the leaders in this space are Allvue, Altvia, Backstop, Chronograph, Cloud Theory, Dealcloud, Dynamo, Foundersuite (for startups and funds), Navatar, Satuit, and PEFrontOffice. These firms are typically built on top of the Salesforce platform, although some (e.g., PEFrontOffice) are not. These systems particularly shine in portfolio management, accounting, LP reporting, and deal term workflows. They typically are the most expensive, because they come prepackaged with heavy customization for the finance sector’s unique needs; and they typically lock you into that vendor for future customization. Trillian Jeong, CEO, Wealthblock.ai, observed that in these systems, “the back-end functionalities (typically) take priority in design, i.e. the software is designed to focus on portfolio management; sales & marketing is a secondary consideration.”

5) Younger PE/VC focused platforms, e.g., Affinity and 4Degrees. These are typically built on a modern, fully integrated tech stack, not on a legacy platform like Salesforce. As an example of features specific to our sector, Affinity has a differentiating feature called Alliances, that allow you to share your network with other Affinity users (e.g, other VCs) or portfolio companies – in return for them sharing back with you.  4Degrees offers something similar.  These platforms typically take advantage of the data exhaust of the people in your network to automatically tag and update your data. The big risk factor with these firms is stability; you wouldn’t want to store your data in a firm that you’re not confident will be around for the long haul. Trillian Jeong observed, “A modern tech stack (without legacy tech) allows faster development and integration with other service components, e.g. there are many KYC, accreditation, e-signature, ACH, credit card payment vendors to choose from to integrate with. If tomorrow, a new way of communication become trendy (e.g. Calendly, Zoom), it would take 2-3 weeks to integrate, instead of months if not years.”

Tim Friedman said, 

“Private equity and venture capital are very different when it comes to selection criteria.  For me, the big difference here is that if you take a platform and adopt the workflows which it uses on its platform, you are immediately adopting a best-practice approach used by 1,000+ other firms. For private equity firms which are moving from Excel or a barely functioning existing CRM, they often need this kind of guidance.  We find VCs to be very different in their approach. The VC has a strong sense of how they want to shape the platform, and look for tools like 4Degrees and Affinity which will afford them this flexibility, where more traditional PE products would require a ton of custom work. Believe me, no private equity guys have a set of requirements as detailed or modern-thinking as you have compiled. We see lots of variation when it comes to private equity requirements.”

“For example, take intermediaries. DealCloud has a very robust pre-built workflow designed specifically around managing relationships with intermediaries. It has every field you could think of and thoughtful workflows to help you keep on top of this, plus an integration with Sutton Place Strategies. Same for reporting, where DealCloud already has a ton of pre-built reports designed to give management oversight of business development activity, for example.”

I asked Franklin Tsung, CEO, BlackCrown Corporation, for his advice to buyers.  He recommended: 

“First, understand how wide & deep you wish to go as a firm and be honest on your budget and employee size. Knowing this will help you determine whether you’re better served with a quick turnkey 3rd party CRM offering (reseller) or buying direct Salesforce subscriptions. If you’re opting for a direct buy, then the best approach is to size up a decent budget, understand the integration needs, vet the consultants, and ensure you’re able to maintain the system in-house (otherwise you’ll rely on the consultant for ages).”

“Second, across any CRM, it’s important to understand flexibility and the upgrade potential. Salesforce and Microsoft are both dominant for various purposes but there are niche providers. For the niche providers, it’s important to prepare yourself to live in a restrictive world with limited upgrades and limited options for a deeply customized solution.“

“Lastly, always understand there is a give & take with all options. With CRMs, the sky is the limit and it is valuable to spend time forming the proper due diligence. Once a firm has chosen a CRM, it’s going to likely stay for 5 years. Migrations are a costly exercise as well [often running as large as $50,000 one-time fees) so keep future transition costs in mind.”

IMPLICATIONS FOR INVESTORS

One of the safest bets in VC is to look for a platform change, and then look for companies built on a rising new platform. Many impactful companies have been built on the Salesforce platform, notably Veeva and some of the custom platforms I list above focused on private equity/VC clients. I predict that we will see a wave of vertically-focused CRM/martech platforms built on top of HubSpot and other next-gen CRM tools. And I definitely want to hear from those companies when they’re raising capital!

OTHER INVESTORS’ MARKETING AND SALESTECH STACKS

For comparison purposes, I wanted to share the CRM & marketing tech stacks of a few other investors.  Arno Niazi, CEO of GoingVC, said, 

“We use Mailchimp as our primary CRM, and HubSpot to track relationships with potential investors and deal flow. We’ve integrated the two to pass investors that sign up to our newsletter to the HubSpot CRM for those considerations. From our blog, we include Mailchimp generated landing pages that act as email gateways for some of our content (i.e. downloadable white papers, models, etc). Within Mailchimp, we auto-segment users based on (a) questions on our signup form, and (b) automated fuzzy searches (i.e. if “vc” appears, we tag them as a VC, if “.edu”, a student). We also use Hootsuite, Zapier, Integromat, and Google sheets to automate how we track our metrics to create KPIs to monitor our success metrics. We also use Hootsuite to automate our social media account publications and we use Slack internally with Trello to manage tasks (i.e. each week we manage what content to be shared in our newsletter and progress).” 

Gunnar Cuevas, CEO of CARL, Inc., a quantitative hedge fund investment platform, said, 

“Our current CRM has evolved to include a tech stack made of custom developed applications for data analytics, and services like Airtable, Hootsuite, and ProFundCom (digital marketing tools for fund managers). We use the APIs of these providers to transfer data between services and track everything that happens on our app and website. Within the CRM, all clients are segmented based on a given “status.” This status is generated within our application, and communicated to our Airtable CRM file in order to update all data about the client. After the data has been updated, our data analytics services make a decision on what messages the client should be served next. This begins an automated series of messages delivered via email and social media when possible. Our objective is to create for our clients a digital experience that helps them in their investment journey. For example, a client who has not finished creating an account will be reminded and supported by our system. Then our data analytics system measures the success of our messages, and chooses what messages to send next, and once the investor has finalized creating an account, the status will change and the client will be directed into a new automation to manage the relationship.”

For details on some other investors’ CRM solutions, see:

For further reading:

Thanks to Ajay George, CEO, Enhancio; Dan Imbriaco, HubSpot; Connor Jeffers, CEO, Aptitude8 (RevOps, Salesforce, and HubSpot experts); Daniel Lopez, President, Sevanta Dealflow; Sabena Quan-Hin, Flow Capital; Andrew Reiner, CEO, Grapevine.ai; and Nicolas Zumino, Founder, Salesforce consultant ALTANIZ, for thoughtful input.

Disclosures: I’m an investor in Foundersuite and both an affiliate and a client of HubSpot.

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