Is there a purpose-built CRM for Search Funds?

New searchers often ask which CRM and/or email outreach software they should be using and so we thought it would be helpful to share the results of a survey we did that included 100 Search Funds. 

The short answer to the question of whether or not there is a purpose-built CRM for search funds is ‘no’. 

However, some searchers have found success by customizing CRM systems designed primarily for sales and marketing teams.

Interesting Findings

One of the interesting findings from this survey is that there were few emphatic endorsements of any particular CRM system and we learned that searchers were using over 30 different CRM systems. 

Not only did we find out which CRM systems are the most popular among searchers, we also learned which CRM features are the most valuable in a search as well as potential pitfalls to look out for when choosing a CRM system for a Search Fund.

The searchers we surveyed were at various stages of their search – from fundraising to having completed the search (some with a closed deal and others without a closed deal). 

More than 90% of the searchers we surveyed were located in North America and more than 75% of them had previously used a CRM system of some sort (i.e. in a previous job).

Does a Search Fund need a CRM?

Before we get into the survey results, let’s discuss whether or not a Search Fund even requires a CRM system. 

There is less utility in a CRM system in the early stages of a search because you have fewer relationships to manage. However, over time the value of a CRM system grows considerably as the fund adds leads, builds relationships, executes outreach plans, etc. 

Excel and Google Sheets as a CRM

Many searchers start by using Excel or Google Sheets to track both investor relationships and their lead funnel. This is a perfectly valid approach and is usually workable in the early stages of a search, particularly if there are just one or two searchers. There are some good CRM templates for Excel and Google that can be easily modified to suit the basic needs of an early stage search.

For the searchers we spoke with, the rationale for using Excel or Google Sheets was simple: they already knew how to use these tools (zero learning curve), they felt it was unlikely that they’d use the ‘search CRM’ again once they found a deal, and Excel and Google Sheets are inexpensive. 

Challenges with Excel and Google Sheets as a CRM    

The challenges with Excel and Google Sheets generally come as the search scales beyond simply managing a list of potential investors, to full-blow deal sourcing campaigns and working with interns.

Many searchers adopt a real CRM application within the first few months of their search. A few of the challenges with Excel and/or Google Sheets reported by searchers included:

• Limited ability to see aggregate views of the overall search status (no summary view to share with investors, no funnel status views, etc.)

• Difficulty tracking all sourcing activities in a central location for each lead (i.e. email threads and notes); funds often ended up with multiple workbooks or sheets.

• Poor outbound activity automation (emails, response tracking, follow-up alerts, etc.)

• Inability to centrally store documents at the lead level (NDA’s, financials, etc.)

 

We believe that most Search Funds would benefit from a simple, low cost, purpose-built relationship management system (that is beyond what is available in Excel or Google Sheets). 

Such a system will be particularly helpful to a searcher 4-6 months into the search (earlier if there is more than one person sourcing deals).

Common Search Fund CRM Requirements

Our research and experience suggests that there is a fairly common set of core CRM requirements needed by most Search Funds, as follows:

• Simple – easy to learn and use

• Low cost

• A database with customizable fields (and/or out-of-the-box fields that work for searchers)

• The ability to classify contacts (i.e. brokers, prospects, company owners)

• The ability to attach documents to leads (PDFs, Word, Excel, etc.)

• A view that integrates outbound activities (by lead and for all leads) 

• Easy to import and export CSV and/or Excel data

 

Many CRM systems, especially those designed for sales and marketing teams, include a lot of functionality that isn’t necessarily needed by Search Funds. While some of this functionality may be ‘nice-to-have’, it often comes at the cost of a more expensive system that can be difficult to set up, maintain, learn and use. 

In general, we don’t think CRM’s for Search Funds (or anyone else for that matter) should be the system in which one plans and organizes their work day. 

There are much better applications to do this. Most people will use either Google or Outlook for email and calendaring. Other tools like Evernote for note taking and Calendly for booking meetings are also popular among searchers. Hence we feel that capabilities like calendars, ‘to-do’ lists, daily priority dashboards and note taking just clutter the CRM experience.

CRM capabilities NOT required by most Search Funds

Integrated Email Marketing 

If high volume outbound email is a key part of your strategy (i.e. hundreds or more emails per day), this is a nice feature. For lower volume outbound email, it is probably not needed. CRM systems with this feature built in can be a bit more difficult to use and typically require more configuration to get up and running. 

It’s generally pretty easy to integrate a 3rd party email marketing tool whenever needed. We found QuickMail, SalesHandy, SendGrid and Mailjet to be among the most popular email marketing tools used by the searchers we surveyed. Perhaps we’ll do a separate post on this topic in the future.

Data Enrichment

In the context of a CRM system, data enrichment is the process of combining data from external sources like Pitchbook, SourceScrub, Dealroom, etc. with the lead and contact data in the CRM. 

With data enrichment, when you add a new lead to the database, you can have an external data source supplement the data you have on that lead by importing missing or new information (like fundraising events, transaction history, valuation, news, etc.).

This can reduce manual data entry, if the searcher intended to add this level of detailed information into the CRM system. However, we question why a Search Fund would want to fill their CRM with granular and non-proprietary lead information. 

A lot of the information provided by data enrichment services is available for free with a Google search. If a searcher does find the need to get more granular information on more potential leads than is available for free, we believe it is easier to pay to access this information through the data provider’s web portal, rather than enriching the data within the CRM system itself.

Relationship Model Automation

Some CRM systems enable users to connect their social profiles in order to build a model of how to optimally interact with the people in their network. To do this, a network model is built using information like the frequency, type and length of interaction with each contact in the overall network. The model then uses that information to suggest actions on how to manage relationships.

Perhaps this has value for funds with large teams that have many existing of connections, however, for most Search Funds, we think this just overcomplicates the CRM system and is of limited value.

The Email Inbox as a CRM

Some CRM systems, like Streak (which is built into Gmail), are built right into an email application. This type of CRM system was quite popular among the searchers we surveyed and for good reason. 

Streak runs as a Chrome extension and so it’s easy to install and is integrated into the Gmail user interface. Some searchers loved the ability to tag emails, see the entire email thread and track the target’s progress through the various stages of the funnel, all without having to leave Gmail. 

Solo-searchers seemed to particularly like this way of working as their collaboration requirements are minimal. 

Other searchers, however, found it confusing to have the CRM integrated with email because the entire relationship management system is designed primarily around email. As such, it didn’t operate as a central store for relationship management but rather an add-on to the Google suite for email marketing. 

Entering call notes, documents and activities that didn’t take place over email felt lost in the system for some people. Most searchers wanted to attach notes and documents to the account or lead record in the CRM, as opposed to storing them separately in Google Drive.

Several searchers also complained that Streak was too expensive and didn’t enable them to work with team members who use Outlook.

Which CRM Systems Do Searchers Use?

Let’s get to the survey results to see which CRM systems Search Funds are using. 

We received input from 100 different funds and there were 34 different CRM systems used. 26 out of the 34 CRM systems were used by just one of the funds in our survey, so it is a fragmented market. 

Only two of the funds that participated continued to use Google Sheets or Excel beyond 6 months into the search.

Here is a list of all the CRM systems that were used by more than one Search Fund along with the count of the number of Search Funds using each CRM:whi