A virtual dataroom (VDR) allows investors to share secure documents and other data online. This tool can help startups streamline due diligence and establish confidence with investors throughout the fundraising process. By eliminating the need for email exchanges and streamlining due diligence, founders of startups can concentrate on building leads.
Startups often struggle with what information is required in their data room for investor due diligence. If they include too little information, they run the risk of not being able answer any questions investors might have. In addition, they should include too many details and they could be overwhelmed. Luckily, the ideal VDR provider will allow you to organize and prioritize important documentation such as forecasts, financial projections and business plans, cap tables and more to help with effective due diligence.
Startup founders must include an in-depth analysis of rivals, as well as their key financial documents. This section should show that the startup is well-versed in its market, including its immediate competitors by highlighting key distinctions such as price points and features, as well as customer satisfaction ratings. The startup should disclose any market research that it conducted as and any public reports that back up its claims.
The startup should also include the articles of incorporation, which should include any revised or restated versions. This will help establish the startup’s legitimacy and also provide a more precise picture of its ownership structure. Choose a vendor that provides a free demo trial to test the software and to test the presentation to investors. Find a company that has flexible pricing plans that can scale to the growth of the business through subsequent rounds of transactions and financing.