A virtual data room (VDR) is an online secure repository for sharing sensitive documents and information with investors. This tool aids startups in reducing due diligence and establish confidence with investors during the process of fundraising. By streamlining due diligence and removing the need for back-and-forth email exchanges, startup founders can concentrate their efforts on building leads.
Startups often struggle to decide what information they should include in their data room as part of investor due diligence. Include too little and they risk not being able to answer any questions investors may ask; too much and they may be overwhelmed. The right VDR provider makes it easy to prioritize, organize, and store important documents such as financial forecasts and projections, business plan and cap tables, among others. for efficient due diligence.
Startup founders should include an in-depth analysis of their competitors and their financial documents. This section should prove that the startup is well-versed in its market, including its immediate competitors, by highlighting key differences, such as price points, features and customer satisfaction ratings. The startup should disclose any market research it conducted data room software as in addition to any public reports which support its claims.
The startup should also include the articles of incorporation, including any updated or revised versions. This can help establish credibility of the startup and provide a more clear picture of its ownership structure. Look for a provider who offers a no-cost demo or trial to try the software and to test the presentation to investors. Select a vendor that offers flexible pricing plans to scale with the company’s growth through subsequent rounds of transactions and financing.