Selecting a Virtual Data Room for Startup Fundraising
A virtual data room (VDR) is a secure online repository for sharing sensitive documents and information with investors. This tool helps startups streamline due diligence and build confidence with investors throughout the fundraising process. By eliminating the requirement for email exchanges, and streamlining due diligence, founders of startups can focus on building leads.
Startups often struggle to know what information to include in their data space for investor due diligence. If they don’t include enough, they could not be able to answer any questions investors may have. Include too much and they will be overwhelmed. The right VDR provider makes it easy to organize, prioritize, and store important documents such as financial forecasts and projections such as business plans cap tables, etc. for efficient due diligence.
In addition to the financial documents, founders of startups must also present a comprehensive competitor analysis. This section should demonstrate that the company is knowledgeable in its field, including its immediate competitors by highlighting key variations in price or features, as well a customer’s satisfaction ratings. The startup should disclose any market research that it conducted, as well as any reports published that support its claims.
The startup should also include the articles of incorporation along with any updated or restated versions. This will help establish the legitimacy of the company and provide a more clear picture of its ownership structure. Choose a service that provides a free demo trial to try the software and to practice presenting to investors. Choose a service that provides flexible pricing plans to scale to the growth of the business through subsequent rounds of funding and transactions.
