Why Startup Fundraising Needs a Virtual Data Room
A virtual data room (VDR) is an effective tool for safeguarding and managing important business documents. Startups are increasingly utilizing them to increase the value of transactions and accelerate due diligence. In this article we will examine why it is that a VDR is a good tool for startups’ fundraising and provide some tips to help you build one.
When it involves investing startups often have to do a lot to convince investors that they’re the right choice. It’s therefore crucial to be as transparent about your company as you can. This will ensure that due diligence doesn’t get delayed unnecessarily, and investors have the information they require to make a sound decision.
One way to do this is to create an investor data room. This is a safe, online repository that contains the information that investors need to know about during their due diligence. This includes a complete overview of your business (an organizational chart, and possibly a hiring strategy) and financials (income statement as well as balance sheet, projections and more) and a cap table that outlines all the different buying options for your company including preferred stock, common stock and convertible debt.
It’s worth including any newsworthy reports or market research that highlight your company’s unique position within the industry. Additionally, a section highlighting customer references and referrals can be an excellent way to showcase how valuable your team’s experience is.