Selecting a Virtual Data Room for Startup Fundraising

A virtual data room (VDR) is an online data room software secure repository for sharing sensitive information and documents with investors. This tool helps startups streamline due diligence and establish confidence with investors during the fundraising process. By eliminating the need for email exchanges as well as streamlining due diligence, startup founders are able to focus on cultivating leads.

Startups often struggle to determine what information to include in their data room to facilitate due diligence by investors. If they include too little, they risk not being able to answer any questions investors may ask; too many details and they’ll be overwhelmed. Luckily, the right VDR provider will allow you to organize and prioritize important documents such as forecasts, financial projections, cap tables, business plans and much more for efficient due diligence.

Alongside the most important financial documents, the founders of a startup should also submit a thorough competitor analysis. This section should show that the startup is well-informed about its marketplace and its immediate competitors by highlighting key differentiators like pricing, features, and customer satisfaction ratings. The startup should share any market research that it conducted, as in addition to any public reports which support its claims.

The startup should also include its articles of incorporation as well as any updated or restated versions. This will prove the startup’s legitimacy and provide a more precise picture of its ownership structure. Find a company that provides a free demo or trial to try the software and to practice presenting to investors. Also, choose a provider with flexible pricing plans that will grow as the business grows through subsequent rounds of financing and transactions.