How to set up and use a CRM to run your VC fundraising process

Using the right tool for the job can make life a lot easier, and fundraising is already hard enough without having to push that boulder uphill. Customer relationship management (CRM) software isn’t just for managing customer relationships anymore. More and more startups are leveraging CRM systems to streamline their investor relations.

So, how do you set up a CRM system for tracking and following up with investors? Here’s a step-by-step guide.

Choose a CRM system

Not all CRM systems are created equal. You need to choose one that fits your startup’s needs. Look for a system that allows you to segment your contacts, track interactions, set reminders for follow-ups, and generate reports.

Some popular CRM systems for startups include Salesforce, HubSpot, and Zoho CRM. Personally, I’ve been using a free version of HubSpot for years, but you should find whatever works for you.

Create your “stages”

Once you have your CRM system in place, the first step is to segment your investors. You might categorize them based on how much they invest, their industry focus, their geographic location, or their role in the investment firm.

The goal is to group your investors in a way that makes sense for your startup and allows you to tailor your communications effectively.

I typically create the following stages:

  • Lead: Everyone who crosses your path, even if they are a terrible fit.
  • Qualified lead: A qualified lead in the context of sales and marketing is a potential customer who has been assessed and determined to meet certain criteria that indicate they have a genuine interest or need for a product or service. Most importantly: Are they a good fit for your industry and round size?
  • Outreach: This is where the journey begins: Can you get a warm introduction?
  • In conversation: They’ve responded! Yay! Don’t let the conversation get cold.
  • In meetings: You’re starting to book meetings and calls with their team. Stay on top of scheduling; things can fall through the cracks.
  • In diligence: You know what this one is. Keep a close eye on these investors, and be ready to respond quickly when they have questions.
  • For later: They’ve said they’re not interested in your startup stage, so these are the ones you keep notes on for your next round.
  • Term sheet: You very rarely need this stage, but it feels really good to move potential investors to a “yay we have a term sheet from them!”
  • Hard no: All investors who have shut down the conversation permanently. That means they are no longer investing, not investing in your stage or space, or have a conflicting investment.
  • Soft no: People who are asking you to circle around once you have more traction, or some other attribute of your business doesn’t quite make a mark. Keep a close eye on these; this is where you can find hints about what’s not working about your fundraising process!

Log every interaction, and then stay on top of things

Every call, email, meeting, and conversation with your investors should be logged in your CRM system. This helps you keep track of your interactions, understand your investors’ concerns and interests, and ensures that nothing falls through the cracks.

Regular communication is key to maintaining strong investor relations. Your CRM system should remind you when it’s time to send an update, schedule a meeting, or follow up on a previous conversation. By automating these reminders, you ensure that your communications are timely and consistent.

Your CRM system is only as good as the data it contains. Keep it updated with the latest contact information, investment data, and interaction history. This not only helps you stay organized, but also ensures that your communications are relevant and personalized.

Use analytics to stay on course

Modern CRM systems come with powerful analytics capabilities. Use them to understand your investors’ behavior, identify trends, and measure the effectiveness of your communication strategies.

A data-driven approach can help you refine your investor relations strategy and make more informed decisions.

Integrate your CRM with other tools

Finally, consider integrating your CRM system with other tools like your email platform, project management software or financial reporting system. This can help you streamline your processes, reduce manual data entry, and ensure you have a holistic view of your investor relations.

Setting up a CRM system for investor relations might seem like a daunting task, but the benefits are well worth the effort. By streamlining your investor communications, improving transparency and maintaining a regular dialogue, you can build stronger relationships with your investors, gain their trust, and ultimately secure their support for your startup’s growth journey.