VC x Software — which tools do VCs use?
VC Investors invest in the future, right? Let’s go under the hood and find out what technology is powering the industry.
I get asked a lot by customers and investors what type of software other VCs are using for X use case or to solve Y problem. Invariably, the response is the same: 95% of VCs use software that’s not ‘built-for-purpose’ to run their operations.
95% of VCs use software that’s not ‘built-for-purpose’
The VC industry is underserved by software, which means, so are founders. So far I deduce the main reason being of the perception of a small market size by the investors themselves.
After reading Bartosz’s post on ’Data-Driven VC’s’, I thought it would be useful to put together a market map visualisation of exactly what software the VC industry is using to run their operations. We’ll cover everything from CRM to Data Collecting and Community.
Where has this data come from?
- More than 200 conversations with VC’s in Europe, US + Asia in 2020
- Industry reports
- Publicly available information on blogs, websites etc
This is V1 of the market map, and I’ll update this every ~12 months. If I’ve missed a company out that you think should be included, please let me know on Twitter.
It’s worth mentioning that there is a lot of software out there, but I’m exclusively interested in highlighting the products being used. For example, I have excluded Kushim.vc. Not because they’re not worthy, but beacuse they don’t appear to have any VC customers.
Notes:
- I’ve left out Video Comms tools like Zoom and I’ve also left out Project Management as a category
- There is no Dealflow category (for another time), so there’s a semi-merge into CRM
- This is primarily focused on the early-stage VC landscape, and less in the territory of Growth/PE funds
- There’s no mention of any bespoke software or tools that VCs have built themselves, please see this post if that’s what you’re interested in
1. Community
Community is a big consideration for VCs, there’s a whole role built around fostering and nurturing it, typically a Community Manager/Head of Platform.
It’s tough to define what community is. Everyone defines in their own way, and they should. Their porfolio of founders + companies are similar but unlike any other. If we had to put a definition on this, it’s best kept loose. Connecting founders with other founders in the portfolio.
Main players: Mobilize, Circle, Slack
2. Talent / Hiring
A real weapon for portfolio companies to take advantage of. VCs are increasingly hiring Head/Director’s of Talent to lead this support function, but it makes sense to use tools like Sompani to quickly spin up a Talent Pool or Job Board to showcase all the jobs the portfolio are hiring for.
Main Players: Sompani, Getro, Circular
3. Platform
There has been a significant increase in the amount of hires that VCs are making dedicated to supporting their companies. You could call Platform the ‘roots’ of a support system. Every VC does Platform differently (how + why is beyond the scope of this post) but there’s a core objective which is to accelerate and enable the growth of their portfolio companies.
Y Cominbator are famous for having built Bookface, which serves as a UI to the YC ecosystem. A handful of other funds have built their own version, but here exists an incredible opportunity to level the playing field for every other VC.
Some of the more proactive funds have turned to Notion & Airtable to create a database directory of the support / platform offering, but still.. this is a square peg for a round hole scenario.
Enter The Network. A platform built to enable VCs to offer a great post-investment experience for their portfolio companies. Each VC portfolio is in itself a growing ecosystem and if stimulated properly, has immense power to support eachother. The Network attempts to harness this power and much like Bookface, provides a UI for the ecosystem to interact with one another.
Main Players: The Network
4. LP Management
Unsexy and time consuming but absolutely neccesary. What makes this easier? Beautiful software. Enter Betterfront, a data anlaytics platform for funds to attract, engage an retain LPs. Sounds cool.
Spreadsheets are the default for a lot of the categories here. Honourable mention to Excel.
Main Players: Betterfront, Excel
5. CRM
The most competitive of all categories. The holy grail of software. To build a great CRM, it requires extensibility and customisation, with a dash of opinion. But as with opinions, there are a lot of them. If there had to be a winner here it’s probably Affinity.
Main Players: Affinity, Airtable, Notion, Attio
6. Scheduling
There’s been a real lack of innovation in this area for a while. Calendly and G Cal are most widely used day to day, and the likes of Amy & Clara deserve a mention but I think everyone stopped using them a while ago.
Main Player: Calendly
7. Cap Tables
Carta set a shining example of what’s possible when building software for the Investment industry. Seedlegals have also done amazing things for UK startups, I’ve included them here but they do a lot more.
Main Players: Carta, Captable.io, Seedlegals
8. Chat
I thought it would be worth recognising the main forms of communication used, between members of the funds themselves (typically Whatsapp, Telegram or Slack) or fostering conversation between the portfolio (Slack, Google Groups).
There’s an opportunity here for a private social network to capture a lot of content and engagement that’s not possible through the current mediums available. Invariably, every Head of Platform or Community Manager I’ve spoken to will admit that Slack doesn’t really solve the need for portfolio communication.
Why? It’s probably because Slack doesn’t have an opinion on how a community of founders/management teams should engage. That’s unfortunate.
Main players: Slack
9. Automation
There’s only one winner. The glue of the internet. Almost every fund will use Zapier in some shape or form. It does what it’s supposed to, IMO one of the most important companies in the startup world.
There are other tools that one could use, namely IFTTT or Integromat but Zapier is the go-to.
Main Player: Zapier
10. Deals & Perks
A vital offering for early stage startups to take advantage of. Typically VCs would go out build a relationship with a software vendor and pre-negotiate a deal, eg $100k AWS Credits or discounts on software like Sendgrid, Twilio and Mixpanel. And Founders would access this via a PDF sent out during their investor onboarding, or upon request to the Community Manager, but more recently we’ve seen companies like Secret and BuiltFirst build a dedicated offering.
Main players: Secret, BuiltFirst
11. Data Collection
How is data being collected? Typeform has been a default for many for a long time, but since their pricing became less friendly, Google Forms & Airtable are the form builders of choice.
Main Players: Typeform, Airtable Forms, Google Forms
12. Portfolio Data Management
There is a lot of software out so this category can be tough, I didn’t find any convincing winners. This requires a bit more research.
Main players: Rundit, Fundrbird, Excel
13. Knowledge Sharing
What kind of knowledge do investors want to share? It could be legal templates, playbooks or relevant pieces of content written by experts. The goal here is curation, putting together the must-have content for a founder and their company.
The problem to be solved? Simply sharing links and/or files, easily searched and found later. How does this information get presented, usually? Believe it or not, a PDF or sometimes, a public Notion.
Yes, there’s a lot of improvement to be made here.
Main player: Notion
14. Events
Hopin has been the breakaway startup of 2020, and for good reason. The platform is solid and I’d be surprised to not see every virtual event being hosted on Hopin in the future.
Main players: Hopin, Eventbrite, Splash
15. Reporting (portfolio)
How do startups inform their investors of progress/metrics?
Many a startup have come and gone in this area. One that I’m happy to still see around is Visible, a product I demo’d several years ago and while we didn’t use it then, I probably would now.
Early stage startups are likely to still report metrics via email, it’s easy to send to multiple non-connected parties and engage in conversation. This is a tough category to enter.
Again, the one constant utility in the VC toolbox is the spreadsheet, and I’ve not been made aware of anything else making it’s mark on how investors review and report on portfolio performance.
Main Player: Visible, Excel, Airtable
16. Company Data
Where do VCs get their data from?
Other than what’s publicly available, VCs typically rely on the same products to discover and analyse data. Some funds have invested in their own algorithms to identify their next investment, and others even pay a monthly retainer to get a list of hot companies to review.
There’s lots of room for innovation on the Investor side here for a company.
Main players: Crunchbase, Dealroom, Pitchbook
17. Network Exposure
A super power of a VC is the network they possess. Their access and favour with others in the ecosystem, be it investors, potential customers, future hires or best-in-class service providers.
For a long time, it’s been difficult to find out exactly who your investors can introduce you into. There’s an incredible amount of nuance in making introductions, but there are products attempting to making the discovery and access of valuable networks and the people inside them, much easier.
Affinity has gained a strong foothold here, but there’s still a lot to be desired. More recently Bridge has become popular for making introductions and appears to still be in beta.
The Network takes a VC’s entire network, and makes it easy for portfolio companies to search, filter and request introductions.
Main Players: Affinity, Bridge, The Network
18. Reviews
A somewhat of a new category. The industry has been longing for a glassdoor type player and now we have two. VC Guide which seems to be more focused on US Investors and UK based Landscape.
Both products have an incredibly opportunity to build something truly valuable for industry.
I’ll be aiming to update this post again in 12 months to see how the industry has evolved.
Thank you for reading! Please share with colleagues that might find this interesting.
If you have any comments or think there’s a product I should know about or add, please message me on Twitter.
