Venture Capital (VC) firms face a labor-intensive problem in handling financial transactions with limited partners (LP). When a cash call is made, each limited partner needs to get notified of their specific cash requirement, and the VC firm needs to track each LP sending in their cash. The Fund management process involves sending sensitive financial information to all the Fund’s Limited Partners. The LPs review their financial information and provide the LP’s distribution decisions or other data. All this needs to be done in a secure environment protecting the LP’s sensitive information.
The management of Limited Partners’ data is currently a manual process for VC firms. Today this process is done mainly through email, pdfs, and spreadsheets. The data involved can reside in several different places like excel files, email sends and receives, and pdfs that have been printed out and filled in by the LP. . Each VC firm can have multiple Funds and each Fund can have thousands of Limited Partners who have invested in the Funds.
Here is a typical scenario:
- Most VC firms manually send out emails to the LPs to notify of financial transactions or updates. The VC person accesses an excel file of LP information and copies the pertinent LP information into an email or pdf attached to the email. They must do this individually for all LPs.
- Then the VC firm sends the email individually to each LP, and perhaps multiple email contacts per LP. Once these emails are received by the LP, the LP would print out the PDF, fill in the information, sign, and scan to create an image of the PDF to send back to the VC via a return email.
- Once the PDF is received back, the VC firm needs to read the returned email or pdf attachment and manually type in any information from the scanned pdf into a file the VC uses to store LP information which is probably a large Excel file that contains all LP data.
There are several problems with this process:
- As a manual process, it is time-consuming, error-prone, and expensive.
- Sending personal financial information back and forth in emails is a non-secure channel and is prone to phishing attacks on VC employees and LPs.
- Sensitive financial information is stored in the emails of various VC employees and in Excel spreadsheets which can be opened by anyone but are usually stored on one VC person’s PC.
- There is no single repository of all LP information. Anyone at a VC firm would have to find the person who controls the Excel file or who received the emails from the LPs to get access to the information, how does that person know the security clearance of the requesting VC employee?
- There is no way to have Data Visualization or Analytics to analyze the status of all LPs in a single fund or across multiple funds because it is not in a database. X2FM provides a visual overview of the status of LP PDF communications to easily see what LPs have not yet responded to a cash call, etc..
X2 Fund Manager (X2FM) is designed to automate the entire process of sending and receiving information from LPs. X2CRM is a full-featured CRM, Marketing Automation (MA) platform. X2 is the first CRM vendor that has built a Docusign type software product that is totally integrated with X2CRM and X2MA functionality. These products work together to build a PDF template with LP data fields pulled from the X2CRM database so that this template can be used to automatically pull the data fields for all LPs with a single PDF document. The X2MA function enables the construction of a single PDF for each LP with the correct information from the database. X2FM will then send an email with a link to access the custom PDF to each LP email address. The LP clicks on the link and can access their PDF and fill in additional information requested on the PDF. The information typed in by the LP is then automatically entered into the LP record on the X2CRM database. There are no manual steps to send and receive data from LPs.
- X2FM is built upon our award-winning X2CRM platform providing a singular source of truth for all LP financial data and can be accessed by anyone at the VC firm according to their security settings.
- The X2 Fund Manager simplifies and automates the entire data exchange process with LPs.
- An email sending the LP information to the LP only includes a link to access the X2DocSign PDF which occurs over a secure web login to the X2CRM application. The LP can download a PDF to their own computer. Once the LP has filled information into the PDF, that PDF is stored in a safe environment and cannot be modified by anyone and meets the requirements for a legal electronic document that can be used in litigation.
- Excel Spreadsheets with all the Funds’ LP Financial information can be uploaded by a single button into the X2CRM database and can also be downloaded in Microsoft Excel files for use by the VC firm.
- The X2DocSign application can automatically create PDFs for any LP, or any group of LPs with LP specific data fields pulled from the X2 DB. LPs type in their own information into the PDF which is then written to the X2CRM database.
- The X2CRM database becomes the single source of truth for all LP information and exists in a protected environment.
- All documents are kept and associated with the appropriate LP, Fund, Contact, etc. in the database environment.
The X2CRM software platform is an exciting new breakthrough in the ability to automatically create LP specific PDFs from a CRM database of LP client information, allow fields to be updated or added into the PDF by the LP, and those updates are automatically entered back into the CRM database without manual effort from the VC firm. These are the software components that enable this capability:
- X2CRM – The X2CRM application allows the easy extension of the CRM application and database to include new database tables and screens like Funds, Limited Partners, and Distributions.
- X2DocSign – The ability to build X2DocSign PDF templates which will access all selected LP records in the CRM database and build out a PDF for each LP with their specific data embedded into the PDF. This allows the automatic creation of LP notification documents, and LP update documents to automate communication with LP’s.
- The ability for LPs or clients in general to fill data into PDFs which gets updated back into the LP record or any other record type in the CRM database. This is the ability to automatically communicate with LPs without manual effort.
- The ability to build blast or drip email or SMS campaigns to send the PDF template filled in with the LP data to all selected LPs. This is the ability to automatically distribute documents to groups of LPs that are segmented from the CRM database of LP data.
- X2 Workflow – A sophisticated Workflow product that performs functions like storing a task for the employee assigned to the LP, creating a calendar event for a LP follow calendar event and then operating custom defined business workflows to automate business processes for the VC firm. The X2 Workflow can send reminders on a selected time frame to LP’s to update their information. This capability enables automation of the business processes of the VC firm.
- X2CRM Data Analytics – Builds the data reports and visualizations to observe the number of LP’s that have filled out PDF documents and the ability to observe LP data across multiple funds.
The X2CRM application can be extended in minutes to include new tables and screens to access and update those tables. The X2DocSign application is built within the X2CRM environment and has direct access to the X2CRM database. No other CRM software product has ever built a complete DocuSign type capability within the CRM platform. The reason is that CRM products are database access and update tools with simple data input and updated screens and menus. No other CRM user interface includes the ability to build and modify PDFs as a user interface capability. No other Docusign type product has ever been built on a CRM platform that has direct access into the CRM database and builds PDF templates and PDF documents to access and update the CRM database. And finally, no other CRM has the sophisticated Workflow engine to integrate the CRM database and the PDF document environments with business process automation code automatically executed.