The ocean of opportunities of the digital transformation for investor groups

You may have noticed an occasional mention of digital transformation in our blog. It’s no secret that digital transformation is a hot subject and has been for some time already. It’s an industry where billions are spent. Not always successfully, true, but let’s not put a blame on the movement itself - in many cases, the problem lies in the execution. Let’s investigate what can digital transformation bring along for an investor group and how to make the most out of this opportunity

Groundwork

One of the first questions an investor group manager must answer is - why are we doing this? What is the goal of the transformation, what do we want to improve? There are many advanced technologies available that sound super sexy, but there is no point in adopting technology for the technology’s sake. Digital transformation must solve some kind of problem, not create a new one. So, what is the biggest problem you have as a network manager - low-quality deal flow? Capability to fill rounds? Time to close the deals? Disengaged members? Lack of perceived value? Not sure?

MIT Sloan Management Review can help out here. They claim that executives who are on a mission to digitally transform their organisation usually focus on three areas: customer experience, operational processes, and business models. Each of these can be further divided into three areas requiring attention. We feel the matrix they suggest is a great starting point for thorough due diligence of the organisational processes, therefore let’s summarise briefly.

Customer experience starts with understanding the customer - this is an area where collecting and analysing data takes the lead. Next up, you must sell yourself to the potential customer - using technology to enhance conversations will help here, e.g. giving the potential future members a taste of the deal flow with temporary, time-limited access to the funnel. Once you have won customers over, the third focus area is touchpoints. In the digital economy and the ongoing pandemic situation, digital channels are increasingly important to provide support. Furthermore, if you work with a multichannel approach, the physical and digital information must both align as well as be accessible from different environments.

Operational processes benefit from digitising the internal ways of working and automation - for example, an angel group manager can set up automated emails to companies triggered by the change in their application status. Virtual enablement allows members to investigate and evaluate investment opportunities from any location or even during the live pitching event. Performance management is again data-focused - having access to statistics about the deal flow and members activity or interests helps managers make better strategic decisions.

Business models can also be digitally modified - e.g. pitching doesn’t have to be on stage only, there are multiple engaging virtual environments to hold events. The creation of new digital business opportunities takes it one step forward. Why not create online pitch training series that supports the founders on their funding quest? And last but definitely not least, digital globalisation means that early-stage capital can join their forces across borders, sharing deal flow and syndicating on investments… if the investors have embraced the sharing and collaborative mindset, that is.

As seen above, digital transformation is not only about technology. It can also be about data, process, and organisational or cultural change.

Execution

You have now come to a conclusion about which part of the organisation or processes you want to transform. You have done your due diligence on them and identified what currently works in the daily operations - after all, there is no sense automating a process that doesn’t work. You have a clear ROI in mind and you’re up for the challenge. Now what?

McKinsey & Company suggest ‘how to do’ is just as important as ‘what to do’. It is an important aspect to keep in mind not only during the execution but from the very beginning of the journey. If we were to speculate, we’d say that change management issues are probably the main reason behind the failed digital transformation projects - often, the technology dominates the human side which leads to fears and objections undermining the process. For example, in investor groups, privacy and security concerns can seriously damage the adoption of digital tools. In order to overcome this, the manager must be open and transparent about the goals and the processes. Good people skills are crucial. Talking of skills, Harvard Business Review has listed the many, many talents required to successfully go through a transformation project. Clearly, it is not a one-man job and we suggest the manager form a team of different talents or, as a minimum, find allies among members who assist the change.

Once the transformation team has been appointed, the work on the implementation plan can begin. The questions to ask are now more focused on details of these same elements - the tech, the data, and the people.

The work starts with the people. It’s important to know what your network members want and what the startups are looking for. The manager must also ensure the organisational processes are transparent, sustainable, scalable, and cohesive. During the transformation, agility is the key - when a new discovery is made during the process, it makes sense to adjust and improve the plan.

In another article from Harvard Business Review, the authors concluded that successful managers focused on changing the mindset of the members as well as the organisational culture and processes before they decided what digital tools to use and how to use them. /.../ The future of the organisation drove the technology, not the other way around.

When choosing the technology, it’s easy to fall victim to the buzz - artificial intelligence is cool, but how will it improve your business? What kind of tool do you really need? How would the new tool or technology work with the legacy tech, can it be integrated with the existing stack? Interconnectivity is the key - every part of the process, be it technology or human, must talk to each other.

The same diligence must be applied to data. How can you collect and access quality data? How to structure and process it? How to join different sources and make them available from different access points? Who has access to what data? How to analyse vast amounts of data efficiently? Once all these questions have been answered, the execution will begin.

Digital transformation can have different purposes and goals - it can be about survival, reducing the costs and increasing the revenues, or it can be about improving the performance of the organisation. No matter what the goal, it provides the opportunity to reach the full potential of the business going from poor to good and from good to great, and as such, it’s much more than just the latest hype in the business management and consultancy industry. We highly recommend going through the organisational due diligence even without the digital transformation plan as it may provide useful insight to improve your network’s value offering and processes. And if you then decide to digitise your outdated funnel management kit, we’re happy to provide one for you.