• Financial Services
  • Private capital
  • Intapp DealCloud

A private capital guide to improving deal velocity with technology

According to Bloomberg Law, private capital dealmakers are in for a slower year — but that’s not necessarily bad. Take advantage of this moment to optimize your deal velocity, prepare for the future, and avoid lagging behind the competition.

Improving deal velocity is frequently a matter of optimizing your deal pipeline, which is best achieved through modern dealmaking technology. But before investing in any tools, you must first have a clear understanding of deal velocity in the private capital markets.

What is deal velocity?

Deal velocity is the speed at which a team or individual closes deals and secures revenue.It encapsulates both the number of opportunities you receive as well as your conversion rate and average deal size.

A high deal velocity indicates a well-optimized sales cycle and a streamlined sales process: The sales team is finding and sending high-value, revenue-generating deals to the dealmakers, who are then closing those deals as quickly as possible.

But in private capital, deals don’t always move quickly. While dealmakers in lower-value sales could make hundreds of sales a month, a private capital dealmaker may only make a few sales a year. Consequently, deal velocity can become a neglected metric in the private capital markets.

However, deal velocity is a more complex metric than the number of deals closed. The length of the sales cycle and the number of days between deals ultimately impact how much revenue you generate.

Your deal velocity is calculated as:

Opportunities × revenue × win rate / sales cycle = deal velocity

As an example:

50 opportunities × $1 million × 0.01 win rate / 356 days = $1,369 a day

You can improve your deal velocity by increasing opportunities, the value of each transaction, your win rate, or any combination of the three.

A low deal velocity could indicate that you aren’t:

  • Generating enough prospects
  • Choosing the right prospects (or connecting with the right decision-makers)
  • Pursuing prospects fast enough (or identifying their pain points)
  • Taking on only profitable deals
  • Successfully closing deals
  • Optimizing your sales pipeline

Over time, deal velocity provides a baseline for success. If deal velocity goes down, it could indicate issues in your dealmaking pipeline. Alternatively, a high deal velocity may help identify the highest-performing salespeople and sales teams within a private capital firm. Without knowing your deal velocity, you may not be able to determine where your firm’s strengths and weaknesses lie.

What holds back deal velocity?

On a practical level, you need support to close a deal — and your speed will slow if that support isn’t there. Stalled deals, incorrect information, and poor collaboration all impact the length of your sales cycle.

You need a well-structured, fine-tuned dealmaking pipeline to support faster deal velocity. Without a solid dealmaking pipeline, you can’t close deals quickly or effectively — and you can’t always tell which deals will be the most profitable.

Stalled deals

When new deals get stalled in the pipeline, it creates a bottleneck. For example, if you have a deal stuck in due diligence, your resources won’t be available to perform due diligence on your next deal.

As delays continue to occur within your dealmaking pipeline, they frequently cascade, so one delayed deal becomes four or five. These delays increase the chances of a deal falling through, and qualified leads may move on to another option.

Incorrect information

If you don’t have the right information about leads, you could be chasing prospects that are less than ideal. Wasting time nurturing leads that ultimately turn out to be bad fits for your portfolio slows down your deal velocity.

Poor collaboration

Deal stages can also be delayed or incorrectly completed due to miscommunication. For example, a team member might miss a message regarding key financial documents they need to collect for an audit, holding back your valuation. Poor collaboration and communication can slow down every stage of a private capital deal.

How does technology pave the way for increased deal velocity?

Dealmakers often try to pack their sales management into solutions that weren’t built for the private capital markets. As a result, key metrics — such as sales velocity — are lost.

You can improve your deal pipelines with technology designed for the private capital markets, such as a purpose-built deal management suite. DealCloud, for example, is a suite developed for private capital that helps firms drive ROI and greatly reduce the kinds of complications that slow down revenue-generating deals.

Third-party and first-party data prioritize the best prospects

Third-party data gives you insights into relationships between people and companies, as well as news about potential opportunities. First-party information reveals a prospect’s relationship with your organization, such as how frequently they connect with you.

DealCloud uses third-party data and relationship management to score leads and prevent you from wasting time with suboptimal opportunities. DealCloud will surface the best, highest-priority leads to the top, so you can focus on the deals most likely to commit and bring in value.

Intelligent workspaces facilitate communication and collaboration

To stay in sync, your team members need modern collaborative workspaces that allow them to connect through popular environments like Microsoft Teams. They’ll also benefit from integrated solutions that can link your communications platform to your deal management suite.

A purpose-built collaborative workspace can host all your documents, helping team members easily locate and access the specific information they need. Intelligent solutions can also automate and optimize your workflows. For example, they can tag relevant team members when deals move from one stage to the next, and they can send out alerts for critical triggers — such as when a prospect stops communicate with you as regularly as they once did, which could indicate they’re losing interest.

DealCloud lets you and your entire dealmaking team sync up and collaborate across a single platform, keeping everyone up to date on key information and updates, and preventing unnecessary delays.

Track and improve your deal velocity with DealCloud

DealCloud is more than just a CRM. With DealCloud, you get the platform you need to measure, manage, and improve your dealmaking pipeline and, consequentially, your deal velocity. As your deals move more smoothly and efficiently through your dealmaking team, you can accelerate your strategy execution, bring in more leads, and nurture additional prospects.

The fact is, more data is always better — but only when it’s usable. With DealCloud, you can collect all your dealmaking information within a single suite, providing insights and analysis across your lead generation and deal completion. You can also improve your average sales cycle and the number of sales you can complete within a given time frame by better understanding your sales funnel.

You’re not just competing against the entire private capital market: You’re competing against yourself and your past performance. Track improvements to your sales velocity and other leading KPIs with DealCloud.