How to choose the right database for your VC data needs
April 18, 2017
As you know better than anyone, the venture capital landscape is constantly changing. To navigate and compete in this noisy, complex space, it’s essential to have the right data behind you to validate your intuition. In this post, we’ll walk you through how to identify your data needs and pick the best resource for your firm.
1. Get prepared
First things first: figure out what you need. Ask a small group of colleagues across your organization, from analysts to general partners, if they would be willing to help determine your requirements. In addition to documenting your current processes, this team will want to talk with users to establish database use cases, detect frustrations and come up with a list of non-negotiable prerequisites.
2. Document the status quo
Now that you have your requirements laid out, you’re ready to look more closely at your current process to see if it’s meeting your needs. Here are some questions you might want to consider:
• Is your existing resource easy to use?
• Does it automate any cumbersome research tasks?
• Does it let you create custom benchmarks?
• Can you use it to build better comps?
3. Conduct research
Ask other VCs what data software they use and browse online resources, from news articles to discussion boards, to create a list of VC data providers. To get a better sense of each product, consider reaching out to the vendor, signing up for a trial or requesting a demo. The best way to understand what a database can do is to watch it in action or try it yourself.
4. Evaluate your options
Once you know what’s available, we recommend scoring various databases on qualities that matter most to your team. This process will involve asking questions to assess key database components, including vendor reliability, data quality and ease of use. You’ll also want to consider how the databases you’re reviewing might support your overall strategy. Will they help you fundraise faster by providing insight into investor preferences, mandates and commitments? Will they allow you to target companies that fit your investment preferences? For more information about what to look for, review our data checklist.
5. Choose what works best for you
At this stage, it might be helpful to validate your decision by completing a quick cost/benefit analysis. To do so, calculate expected time saving on fundraising and deal execution, expected increased business and your expected increase in fund returns. With a fresh understanding of your data requirements and a solid process in place for evaluating options, you’re ready to select the right database.
6. Gear up for a process change
To ensure you’re getting the most out of your new database, encourage project leaders to promote it within your firm and share why they selected it. Of course, don’t forget to train staff members on business processes and changes before the transition to minimize disruption and maximize buy-in.
If you’re looking for an effective database that will help you benefit from better data at every stage of your fund, consider the PitchBook Platform—the most comprehensive private market database for venture capitalists.