The Salesforce platform can be an invaluable tool for fund managers looking to streamline fundraising, manage their portfolios more effectively, and gain a competitive advantage over competing funds. However, exactly how fund managers can best take advantage of the platform can be a difficult decision.

What’s the problem with using Salesforce out of the box for fund management?

The most common issue with using Salesforce for fund management is that fund managers often overpay for licenses. Salesforce Sales Cloud is designed for organizations that have traditional sales and customer support workflows, such as handling leads, opportunities, and support cases, that simply weren’t designed with functionality for private equity fund managers in mind. or venture capital fund managers. So while Salesforce is a very flexible platform, using Salesforce out-of-the-box often results in users ditching the sales and support-related functionality they’re paying for and starting from scratch with custom objects. If a customer commits to implementing Salesforce on their own, using platform licenses instead of full Sales Cloud or Support Cloud licenses is an efficient and cost-effective option, as platform licenses are less expensive and do not include features that Private Equity or Venture Equity fund managers usually rule it out anyway.

The Salesforce Private Equity/Venture Capital Template

Salesforce offers an option for alternative asset managers who want to use Salesforce with features geared toward their industry: the Salesforce Private Equity/Venture Capital template. This template is more useful than out-of-the-box Salesforce for fund management, but unfortunately the Private Equity/Venture Capital template is not a product that will grow or evolve; Salesforce has made no commitment to evolve or support the demonstrated product, so template users are often on their own for enhancements, support, and maintenance. Ultimately, the template serves as a good example of what can be done with customization, but it lacks the support from Salesforce to serve fund managers effectively.

The dangers of using Salesforce to build your own database

Because Salesforce is such a flexible platform, it’s certainly possible to create a database and data structure that represents the workflows inherent in fundraising, LP management, investor management, deal tracking and portfolio management. Salesforce comes with a rich set of tools that allow users to create database tables to store information in a way that is relevant and beneficial to fund managers. Additionally, workflow capabilities can automate processes, and more advanced users can further customize their system with Apex and Visualforce code that can produce results that are more dynamic than what you’d get with Salesforce out of the box.

The main hurdle in implementing automated Salesforce for fund management is deciding how to organize your data. Before you start building your system, it is important to have a very good idea of ​​how you will model your business and how you would build tables in the database to represent that model. For example, some organizations may be investing from separate capital funds and others may have only a single capital fund; Some organizations may make one-off investments and others may engage in follow-on investments; and some organizations will want to look at previous fundraising rounds or events for round-by-round valuations. So the process of building a database becomes an exercise in modeling the data structures that represent the business.

Certainly, this is not impossible for fund managers to do on their own. However, building a truly extensible relational model requires insight into how databases work and requires some foresight into what you ultimately want to see from your data in terms of user interface and reporting.

Self-deployment also brings up the classic “Build vs. Buy” IT spending decision. Salesforce is obviously an incredibly flexible platform and doesn’t require extensive technical knowledge to build just about any database model you want. So, with an unlimited amount of time and interest, it’s absolutely possible to create a very useful fund management tool within Salesforce.

There are many questions fund managers need to answer before deciding to build their own system. These questions include who will support the system, who will maintain it, how it will continue to grow and evolve. There is also the question of what happens once the employee who supports and maintains the system finally leaves the organization. A system with cheap licenses and cheap implementation has the potential to become very expensive later in the solution lifecycle if clear plans are not put in place for how the system will be supported and maintained.