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Using Deal Flow Management Software In Private Equity And Venture Capital

Private equity deals

When starting out in venture capital, there is a strong likelihood that you can be overwhelmed with the endless amount of resources available online on investment strategies and related concepts. However, upon probing a little deeper into some of the specific processes involved in investment, you might get to discover that these resources might not cover some specific areas in investment. Luckily, more tech solutions are being proffered to fill this gap. One of these resources is deal flow management software.

Deal flow management software is handy for venture capitalists as the quality of deal flow goes a long way in assessing the performance of investments. Some experts even propose that this is the most important factor in the business. This is because good deal flow management helps get a strong overview of all the previous and current investments a firm is currently working on. This allows to efficiently monitor all these companies.

In venture capital, making 5 to 10 investments can sometimes require reviewing as many as over 1,000 companies. Without the right tools, this can get burdensome. More so, because after going through the tedious process of reviewing all those companies, only a minimal percentage is responsible for the firm’s investment returns.

However, to make the review process easier, several tech tools can be used. One of these tools is deal flow management software.

How Can You Get Deal Flow Management Software?

Before now, getting deal flow management software that could appreciably help handle your deal flow was quite difficult. Therefore, a lot of firms often resorted to using sales Customer Relationship Management (“CRM”) tools or a simple list. Definitely, both approaches have several downsides and without the right input, may lead to making the wrong investments.

  • Sales-based CRM

Sales-based Customer Relationship Management software used to serve as a good substitute for deal flow software in several firms. The challenge with this is that since most of this softwareisnot built for deal flow management, most firms that use sales-based CRM software often have to do a lot of adjustments and might still not get desired results at the end.

For instance, most sales-based CRM software are based on targets for sales reps. The software is often designed towards helping the salesperson meet these sales targets. This often requires taking deals that show the highest revenues. In venture capital and private equity, this is not necessarily the case as an investor is not required to invest in as many companies as possible.

As a matter of fact, a venture capital investor would not likely invest in over 90% of all available deals. So deal flow software should do the opposite of what sales-based CRM software would probably do with respect to this.

  • Using Spreadsheets

Using spreadsheets to keep tabs of all your possible investments can also get burdensome, especially when dealing with companies that have a lot of data. Reviewing the performance of these sorts of companies using a spreadsheet can be quite tedious, keeping in mind that using spreadsheets also reduces the convenience of collaboration in the course of the review.

Nowadays, there isspecialized software that can help make the handling of your deal-flow seamless. Thisdeal flow software makes reviewing companies much easier and faster.

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