A virtual data room (VDR) is an online secure repository for sharing sensitive documents and information with investors. This tool helps startups streamline due diligence and build confidence with investors during the process of fundraising. By eliminating the need for email exchanges and streamlining due diligence, startup founders can focus on building leads.
Startups often struggle with what information to include in their data room to facilitate investor due diligence. In case they are not careful, they risk not being able to answer any questions investors may ask. Too much and they may be overwhelmed. The right VDR provider will allow you to prioritize, organize and store important documents like financial projections and forecasts including business plans cap tables, etc. for effective due diligence.
Startup founders should provide an in-depth analysis of rivals, as well as their key financial documents. This section should demonstrate that the company has a thorough understanding of its market and immediate competitors by highlighting key distinctions such as pricing, features, and customer satisfaction ratings. The startup should disclose any market research that it conducted as well as any public reports that support its claims.
The startup should also include the articles of incorporation, as well as any updated or revised versions. This will prove the legitimacy of the company and provide a clearer picture of its ownership structure. Find a company that offers a no-cost demo or trial to try the software and practice presenting to investors. Find a company that has flexible pricing plans that scale as the company grows through subsequent rounds of transactions and financing.
