David Teten is an advisor to emerging investment managers and a Venture Partner with HOF Capital. He was previously a partner for 8 years with HOF Capital and ff Venture Capital. David writes regularly at teten.com and @dteten.
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Venture capitalists tout themselves as frontier technology investors, but most of us are using the same infrastructure tools we’ve used for the past 20+ years — Excel and recent college grads searching Google.
We’ve seen some modest progress in people upgrading from Excel to Google Sheets, along with the use of CRM and cloud-based storage services, but according to Sebastian Soler, who oversees data science at Lux Capital, less than 5% of American VCs have a full-time team member who’s focused on technology.
“While the arguments for adopting the latest technology are now too compelling to ignore, finding the required budget for specialized tools can often prove to be a major challenge, especially for smaller managers,” said Tim Friedman, founder of PEStack. “Comprehensive market data can cost upwards of $25k for a leading service, portfolio monitoring can be double that, add in front office tools and you’re quickly into six-figure sums. My advice is: there are now more products than ever which focus on quick implementation and offer a lot of functionality at a fraction of the cost of some of the larger legacy providers.
TotemVC* is one example of a high-quality solution that offers a powerful platform with a transparent, affordable monthly rate. One piece of advice would be to use a service like [PEStack’s] free Vendor Profiles platform to identify viable providers and build up a shortlist. We also track sample clients so that our users can see what their peers are using. I would always advise managers to talk to other professionals to get the real inside scoop on which products work well, how painful the implementation was, and how good the ongoing support is.”
Jonathan Balkin, founder of Lionpoint Group, observed that the highest-impact technology initiative for a new PE/VC fund is typically to configure and enforce usage of a CRM system. The next most impactful initiative is usually to create an easy-to-use LP portal.
