Lesson 9: Using CRM to Fundraise

Using a CRM Tool to Organize Your Fundraising

The acronym “CRM” means customer relationship management. It’s a technological tool that companies use to manage their relationships with customers and prospects. It has become central to sales and marketing in the 21st century. You can take a page out of marketing’s playbook and start to use a CRM-like digital tool to manage your relationships with investors. It will help you be more effective in fundraising.

In the start-up investment world, a CRM is used to capture all the information about each investor and potential investor – contact information; details on each time your company had a “touch” with the person (via email, phone or in-person meeting), what other companies the investor has invested in, management of communications campaigns targeted at an investor, and more. Rather than focusing on a single tactical interaction with an investor, the CRM-led approach orients you to take a relationship-first approach.

Data-driven

The data that you capture in the CRM will help your start-up. You will be able to see how many “touches” you have done; how much time has passed since the last interaction with the investor; what was the open rate of your newsletter that you sent to the investor; how many new investors you have added to your CRM system in a single month or quarter; how many investors are awaiting updates or answers from you; and how many investors said they are looking to invest in 3, 6, or 12 months.

You need a way to manage your fundraising process that is separate from all the emails you get as a CEO.  You also do not want to miss an email from an investor or miss a key deadline with an investor.

Advantages of a CRM-led Approach

A CRM would give you a clear overview of your target investors. You can see everything on one dashboard.

With a CRM – or in your case, essentially an investor relationship management (IRM) system – you can track your outbound contacts and the replies you get. Track meetings and phone calls as well as when investors drop off.

Earlier in this course, we had gone over some tools to help you, but, in the end, you need to use what works best for you. We are not going to dictate what digital system to use. Just use a system.

Your Investor Funnel

All the information that was outlined above create your investor funnel. Imagine a literal funnel that is wide on one end and narrow on the other. You start off wide with your targeting a broad set of investors, and this is the wide end of the funnel, figuratively speaking.  As you move investors through the funnel, as it narrows, you start focusing on the more high-value investors and the ones who are expressing interest in your start-up.

You must make the numbers in the funnel work for you. As you qualify the investors in your funnel at different stages, you increase your productive relationships and communications with investors. In marketing, when a company is projecting $100 million in revenue, it needs at least $300 million of marketing-qualified leads in the sales funnel, so sales can close deals and book revenue.

Similarly, in fundraising for your start-up, if you know you want to secure five investors at the end of the funnel (the narrow part), you should start with at least three times that number at the start of the funnel (the wide part).  If you desire 20 investors (angel and VC), you should target 60 or 80 potential investors, and do your seven touches of each investor that remains in your funnel as you move toward the narrowing of the group. As CEO, it’s your job to be continuously fundraising or turning these people into evangelists for your company (and potential future investors). This investor funnel management gives you important data for your efforts, providing you with timely information for your key performance indicators (KPIs).