Adapting Salesforce to fund managers

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

What is the problem with using Salesforce out-of-the-box for fund management?

The most common problem with using Salesforce for fund management is that fund managers often overpay for licenses. Salesforce Sales Cloud is built for organizations that have traditional sales and customer support workflows, such as managing leads, opportunities and support cases that simply weren’t designed with functionality for Private Equity fund managers or Venture Capital fund managers in mind. So while Salesforce is a very flexible platform, using Salesforce out-of-the-box often results in users throwing sales and support-related functionality that they pay for and starting from scratch with custom objects. If a client is required to implement Salesforce on their own, using platform licenses instead of full Sales Cloud or Support Cloud licenses is an effective and cost-effective option as platform licenses are cheaper and do not include features such as Private Equity or Venture Managers of mutual funds are usually discarded anyway.

The sales force’s private equity / venture capital template

Salesforce provides an opportunity for alternative asset managers who want to use Salesforce with functionality targeted to their industry: the Salesforce Private Equity / Venture Capital template. This template is more useful than Salesforce out-of-the-box for fund management, but unfortunately the Private Equity / Venture Capital scheme is not a product that is growing or evolving; Salesforce has not shown commitment to developing or supporting the product, so users of the template are often on their own for improvements, support and maintenance. Ultimately, the template serves as a great example of what can be done with customization, but lacks salesforce support to effectively serve fund managers.

The dangers of using Salesforce to create your own database

As Salesforce is such a flexible platform, it is certainly possible to build a database and data structure that represents the workflows associated with fundraising, LP management, investor management, deal tracking and portfolio management. Salesforce comes with a comprehensive set of tools that allow users to create database tables to store information in a way that is relevant and beneficial to fund managers. In addition, workflow capabilities can automate processes, and more advanced users can further customize their system with Apex code and Visualforce, producing more dynamic output than you would with Salesforce out-of-the-box.

The primary obstacle in self-implementing Salesforce for fund management is deciding how to organize the data. Before you start building your system, it is important to have a very good sense of how to model your business and how to build tables in the database to represent that model. Eg. Some organizations may invest out of separate pools of capital, and some may have only a single pool of capital; some organizations may make single investments and some may participate in follow-up investments; and some organizations will consider past fundraising events or rounds of valuations all around. So the process of building a database becomes an exercise in modeling the data structures that represent the business.

This is certainly not impossible for fund managers to do on their own. However, building a truly expandable relational model requires insight into how databases work and requires some foresight into what you will ultimately see from the UI and reporting data.

Self-implementation also brings out the classic IT spending decision on “Build vs. Buy”. Salesforce is obviously an incredibly flexible platform and does not require extensive technical know-how to build virtually any database model you want. So with an unlimited amount of time and interest, it is absolutely possible to build a very useful fund management tool within Salesforce.

There are many questions that managers must answer before deciding to create their own system. These questions include who should support the system, who will maintain it, how should it continue to grow and evolve. There is also the question of what happens when the employee who supports and maintains the system eventually leaves the organization. A system with cheap licenses and a cheap implementation has the potential to become very expensive later in the solution lifecycle if there are no plans for how the system should be supported and maintained.