CRM vs DFM
What’s the Difference?
When SaaS CRMs were first created their main value proposition was in creating a centralized digital repository wherein all customer data could be stored. Prior to software like ACT, companies used analog file stores like Rolodex or Wheeldex. The change to digital CRM’s unlocked by mainframes and personal computers was a revolutionary step in making sales teams and organizations more efficient at managing their customer data and outreach.
Over time CRM’s have grown from local instances/corporate servers to cloud-based options like Salesforce, Hubspot, Copper, etc. These CRM’s can now be light enough to operate even within email inboxes like Streak.
While these tools have become increasingly powerful in the breadth of their customization, they all still operate with the same primary goal in mind. Data centralization.
The problem is that the design of this centralization comes at the cost of user time. Even today, CRMs expect users to input almost all the data necessary to maintain any single file, much less the entire database. And the steps necessary just to get this information can be extremely time-consuming.
This means that the accuracy of the database is dependent on the collective user commitment of the team to maintain this data. Very few people have the natural mentality to keep all of the overly detailed information of their day to day outreach in lock step with a CRM. It takes a tremendous amount of time to input all this information.
If a team is to be effective with their CRM then everything must be “logged” by hand and many steps in order to complete some processes are completed externally of the CRM.
Client info like team size, needs, location, etc
Emails
Book a meeting
Book a call
Add Files via dropbox, google docs, etc
Almost all of the work is left to the user except for a few vanity helper features like historical data inputs from outsourced API’s, connection information based on rudimentary email chain data, etc.
Even if a user has paid to incorporate external APIs almost all this outsourced data is terribly inaccurate, and at the very least extremely outdated. It’s difficult to rely on any of this information and very few do.
The point is that CRMs have continued to grow ever more expansive in their ability to store increasingly complex layers of data. However, they have failed to make the management of their users’ day-to-day lives any easier or more efficient. The reality is modern CRM’s are essentially cloud based Excel spreadsheets with increased data storage functionality.
Because of this process most CRM users ultimately get frustrated and end up asking themselves “IS MY CRM WORKING FOR ME OR AM I WORKING FOR IT?”
DFM: Deal Flow Management Software
DFM’s on the other hand should be designed to cover all the core needs of a traditional CRM but should also take things to the next phase by removing various functional steps that are required when using a CRM. For example, is it more important to document every minute detail of a customer, or is it more important to make the process of reaching out to or scheduling a meeting with a prospect easier?
A DFM should definitively work towards the latter and most users would say it’s far more important to make the management of deal flow more streamlined than it is to make the documentation of said outreach more detailed.
At Outpost we’ve taken the same approach that was revolutionary in SaaS development in the early 2000’s, wherein product managers had a religious like obsession with removing unnecessary “clicks” in UI/UX and have applied it to unnecessary functional “steps” in managing deal flow.
For Venture Capital these repetitive functional steps are dominated by the management of new inbound deal flow, current deal flow, and portfolio upkeep. Specifically…
Determining and Entering Deal Information: Investors spend considerable time sorting through emails and form submissions just trying to uncover a startups funding round type, investment stage, the amount being raised, the amount committed, etc to determine if they can even invest in a company. Once this is understood an investor or their team must input this info via a new entry within their CRM. They must do this for every deal they see if they want to maintain an accurate database.
Deal Filtering: Depending on the result of the above investors will then send an email response to the founder or investor who made an intro, what they would like to do next. “Not a good fit,” “lets hop on a call” or “send us your deck” etc. This interaction must also be documented within the CRM.
Pitch Deck Download/Review: Pitch decks tend to be distributed either by email attachment, or a Docsend link. In either case, the investor will typically end up downloading a pitch deck multiple times because it’s easier to find in email than to dig through a download folder. Executive assistants or team members will also need to download a copy of the pitch deck to add it to calendar meetings and to a document room like Dropbox or Google Docs that they hyperlink out of from a CRM. They will do this for every deal they see.
Scheduling and Managing Meetings: It’s painful to think of how much time is spent and wasted by team members scheduling meetings. The back and forth matching up schedules between team members and founders, the rescheduling process, etc. It can be a repetitive nightmare.
Team Communication: Who likes what and why, questions and needs among team members like due diligence questions. This line of communication tends to be distributed across several channels like Slack & text and is impossible to include in files of traditional CRMs.
Sharing Deals: It’s typical for a portfolio CEO to send out a spreadsheet of investor names and contact info asking their investor portfolio if they can make warm intros to anyone on the list. This process is time consuming, repetitive, and terribly inefficient.
How does Outpost streamline and remove these repetitive processes?
Deal Funneling: Outpost uses a custom easily shareable webform that investors send to prospective founders that we call a Connect Link. Founders fill out the form which takes all of 90 seconds to complete. At this point investors are greeted with PERFECT up to date information for the company seeking investment. No need to enter data into a CRM, just let the founder do it for you.
Deal Filtering: Investors can set custom criteria for their inbound deal flow that automatically filters out any unmatching deals that come through their Connect Link. No more needing to sift through founder materials to determine they are raising a $350mil Series G growth round that isn’t going to work for your seed stage fund.
Deal Data: The Outpost Connect Link solves the need for inputting all the relevant data for every startup you meet.
Pass Messages: At the point at which investors decide they aren’t interested in investing they can simply hit “Pass” on any deal. The founder is automatically notified that the investor has elected to pass on their deal. It’s no longer necessary to leave your CRM, go to your email inbox, and write a custom email only then to go back to the CRM and book the change. Because the founder has already completed their account on Outpost they’ll get notified directly. Investors can still elect to send a custom Pass Message if they choose. Regardless, investors don’t need to leave Outpost to complete the process.
Pitch Decks: Pitch decks are directly attached to startup Billboards which means investors are never left needing to download pitch decks ever again. Just flip a Billboard and click “view deck”.
Scheduling Meetings: We’ve built the world’s most streamlined and intelligent scheduling app. A few clicks is all it takes to schedule a meeting with Outpost. No need for back-and-forth emails, booking tentative invites, or the extremely frustrating process of rescheduling a meeting.
Sharing Deals: Sharing deals can be accomplished with only a few clicks on Outpost. Whether the investor you’re sharing a deal with is on Outpost or off, deals can be sent without needing to write custom emails.
Outpost was designed from the ground up to streamline deal flow, remove unnecessary time-consuming steps, thereby saving you time and allowing you to focus on the things your LP’s actually want you focused on. Finding and investing in great companies.