As an investor, the deals you choose to make–and the ones you turn down–are some of your most important decisions. When choosing a tool to support your investing, a software should significantly boost your abilities and help you get ahead. Deal management software can do just that, by helping you identify more deals and act on them efficiently.

Despite drastic technological advancements in the investment world, many funds invest billions while relying on Excel spreadsheets or other disorganized, manual systems. However, there is a lot to consider when it comes to choosing VCand PE portfolio management tools. After all, you must be able to trust them with potentially billions of investor dollars.

In this comprehensive guide, you’ll learn how to choose the right venture capital software for your firm, so you can source more deals, manage your due diligence process, improve your decision-making, easily manage your portfolio, strengthen relationships with your investors, and more.

As the name suggests, deal management software is purpose-driven technology that helps private equity and venture capital firms more effectively and efficiently organize dealflow, manage the due diligence process and close deals on better terms.

As any investor knows, investing is a complex, ever-changing and time-consuming process. It’s multifaceted, data-rich and reliant on decision making. Deal software acts as the backbone for your firm’s deal sourcing and management process, empowering you to make the best decisions. These softwares make your process more structured, informed and accurate, so that investors can source better deals, optimize the due diligence process and make better decisions.

A deal flow management tool is an all-in-one solution that allows firms to manage all the different stages of investment deals, including deal sourcing, pipeline and portfolio management, sales management, fundraising, due diligence, and more.

Managing an investment firm is complex. It depends on countless data points, relationships, decisions and sophisticated financial modeling and management.

There are still many firms who have not shifted from the legacy approach using Excel spreadsheets, emails, phone calls, calendar reminders and overly stretched human capital. A deal flow solution takes this highly manual, time-consuming approach and converts it into a streamlined process that connects the full investment life cycle and firm management from top to bottom.

Manage deal flow & deal sourcing in real-time

Deal software systematically organizes the steps of your dealflow and deal sourcing processes into an intuitive structure eliminating ad hoc processes, spreadsheets and emails.

Deal flow software helps you better manage your dealflow, enabling you to:

• Build a more collaborative deal sourcing team
• Increase visibility across departments and teams
• Identify and implement your promising deal signals
• More accurately assess deal opportunities
• Make faster, more informed decisions

Seamless pipeline management

Your deal pipeline contains multiple, distinct steps. Each with the potential to make or break a deal. Deal flow pipeline software increases the odds of reaching the end goal you set for each deal by, once again, systematizing the identification, evaluation and management of the deals you source.

In doing so, you’ll increase the reasoning and historic evidence behind your decisions. Dealflow software improves the management of the entire pipeline lifecycle, from sourcing right through to your ultimate investment decision.

Boost effective fundraising

It doesn’t matter the quality of the deals you see if you don’t have the requisite capital to invest. As an investor, you know that the art of fundraising is reliant on relationships, past success and your ability to communicate your fund’s vision. With all its moving parts, the fundraising process can quickly become disorganized and inefficient. Deal flow management software moves the fundraising process out of inboxes, forgotten notes and spreadsheets, converting it to a highly optimized, methodical approach.

Managing fundraising using deal software enables you to:

• Clearly define your fund strategy to attract investors who align with it
• Get clear on your target investors based on preferences, risk appetite and investment capacity
• Consolidate marketing materials for a more organized pitch process
• Establish and update fundraising timelines to track progress
• Set your fund’s legal structure and terms and conditions
• Track funding coming into your fund and close it once fully subscribed

Improved due diligence

Your firm’s due diligence process is fundamental to your success. Deal software enables you to undertake all forms of due diligence -- financial, commercial, operational, legal, tax, ESG, and others -- so you can assess more deals in less time with higher accuracy.

• Consolidated research and analysis
• Assessment against defined investment criteria
• Market and industry research, competitive benchmarking
• Legal and regulatory documentation
• Collaboration with external advisors

Optimized portfolio management

Once you make an investment in a company, you are then responsible for managing your portfolio so you and your LPs have clear insights into company and fund performance. Robust portfolio management functionality makes this process more efficient and effective. The best portfolio management platforms enable you to:

• Monitor portfolio value and track performance based on detailed metrics
• See how your current portfolio aligns with your investment focus
• Calculate IRR of funds and companies
• Simplify valuations and compare portfolio companies side-by-side
• Automatically calculate your NAV, DPI, TVPI

Simplified, in-depth reporting

With the insights it provides, deal flow software makes reporting the status of your fund far more simple, internally with your team and externally with LPs and GPs. Get real-time updates on key aspects like invested amounts, share of ownership, operational KPIs and the latest board output.

As a firm that provides clear, in-depth reporting to your investors, you’ll offer an uncommon level of transparency that breeds trust with your LPs and GPs. Simplified reporting enables you to:

• Use real-time investment metrics to provide detail-rich investor updates
• Easily communicate fund performance, investment activities, and all material developments.
• More easily compile quarterly and annual financial reports.
• Make meetings with investors and committees more informed through in-depth data

Deal software comes in many forms. There are different software options for venture capital and private equity, but there are also all-in-one PE and venture capital software solutions that cater to the complexities of all forms of investing.

Regardless of the type of fund, deal flow pipeline software should offer core features that benefit. Let’s take a look at them:

Dealflow management

As any investor knows, managing your dealflow can get messy. This makes automated, seamless deal flow management a must. A software-backed deal process enables you to more effectively manage your deal lifecycle,  see your deal pipeline in real-time, prioritize and track deals, and monitor deal progress and follow-up as required.

Collaboration features

Slack, teams, text messages, email… collaborating within your firm can quickly become disorganized. Deal software with robust collaboration features helps keep your team connected and streamlines information flow on deals. Centralizing collaboration in this way saves time, improves decision-making and makes sure no detail is ever lost.

A portal for partners

Communication between LPs and GPs is often done manually, by email. A partner portal gives them automatic transparency and streamlined communication. A portal provides a real-time line of sight into where their money is going, and how it’s performing. This is like a real-time data room for your LPs and GPs.

Document management

Investing comes with a whole lot of paperwork. It can get overwhelming for all involved. That’s why it’s vital your deal software is equipped with in-built, secure document sharing functionality. A way that you can easily share investor updates, contracts, reports and every other piece of vital information with your partners.

Integrations

All modern teams run on multiple software tools. That’s why it’s critical that your deal flow solution makes integrations with other tools simple. Your deal software must seamlessly integrate with the tools you use daily to connect your data end-to-end and provide a smooth user experience.

Compliance and security

Needless to say that when you’re managing millions of dollars and sensitive data, security is paramount. At a minimum, your deal software must be ISO 27001, SOC2 and GDPR compliant. The most secure deal management solutions will also undergo routine, third-party code audits from security experts to prevent data breaches.

Relationship management (CRM)

There’s no getting around it: the success of your firm relies on the quality of your relationships. And strong relationships are built on the back of having a dependable customer relationship process in place, which requires a dedicated deal flow CRM platform.

Many PE firms will rely on generic CRM software. But the reality is that while these are solid relationship management tools, they don’t properly cater to the needs and nuances of investor relations. Your deal flow CRM software needs to be geared toward the more complex, protracted and relationship-based nature of investing.

Project & workflow management

VC firm workflows are complex, require disparate data inputs and don’t always follow a straight line. Workflow management features automate and streamline your deal workflows, and dramatically reduce potential for deal-compromising errors or omissions. This workflow management functionality acts as your single source of truth. It consolidates information, avoids silos, tracks deal lifecycles, automates workflows with tasks and reminders, and more.

Customization

Every team is unique and the industry is constantly changing. Therefore, your deal management software must be customizable. It should be configurable to your firm's processes, structures and preferences. Without deep customization, it is difficult to fully support your team’s unique needs and adapt as they change.

There are a handful of robust deal management solutions available. And no two are alike. As mentioned earlier, there’s VC portfolio management software and private equity deal flow software, each of which can come with subtle differences.

So when making a decision about adopting deal software in your firm, it’s important that you know the functionality you need and which solution can deliver on it. You need to be sure that you have the right deal management software for your firm’s investment approach.

With $135 billion managed through its platform in 40 countries, it’s clear why Edda is the preferred deal management software for leading firms. Edda is built on the principle of enhanced visibility at all stages of the investment process. This unparalleled transparency allows you to see the status, impact and value of your investments in real-time.

Edda is truly an end-to-end solution for investment firms that unifies your team and operations. Where Edda also stands out is the fact that it’s designed as one of the few platforms that is both private equity and venture capital deal flow software.

Edda’s PE and VC tools help you master deal sourcing, the due diligence process, portfolio management, partner communications, and every other aspect of deal-making into a single all-in-one solution. Better yet, Edda is one of the few platforms that provides a mobile app to allow you bring your deals with you anywhere.

Top features:

• All-in-one Dealflow & Portfolio Management
• Relationship management (CRM)
• Workflow automations
• Accelerated due diligence
• LP Portal
• Mobile App
• Simple integrations
• Enterprise-grade security (SOC2)

Employing a deal flow management tool is a significant advantage over archaic processes. That’s because deal flow management software improves dealflow, optimizes your due diligence process, enhances portfolio management, strengthens relationships and optimizes fundraising. In short, deal software takes all the core principles of investing and elevates them.

Today’s investors want not just the best dealflow and highest returns but a good experience that’s built on trust and transparency. And that’s exactly what PE and venture capital software tools deliver.

Say goodbye to messy deal management. Click “talk with us” to access a free trial of Edda.