Due diligence of investors is a vital aspect of capital raising and having the right information room for startup can cut months off the fundraising process. With all the information needed organized in a streamlined digital repository, investors can swiftly go through a startup’s information and make educated decisions.
All this information in one place allows startups to demonstrate their value proposition. It makes them document aspects of their business that were only within the founders’ heads for example, customer acquisition plans and product development. Preparing for an acquirer’s or investor’s due diligence allows a new company to look at their business from the perspective of other people. This can prove beneficial for future management teams.
The most reliable virtual data rooms for startups provide easy, but controlled access to a centralized collection of current and relevant data. They also offer advanced features that help streamline the fundraising process, including customizable NDA templates and central file storage. Startups can also link their virtual data rooms to tools they already utilize to run their business, such as cloud storage and mobile apps to provide an easy experience for investors.
The most common documents that go into the data room for startups include investor presentations (also called a pitch deck), strategy documents, and key performance indicators (KPIs). Startups should also think about including market research, testimonials, surveys, and customer retention and satisfaction data. Startups should be able to update the data room as their business grows, so that they can present a complete picture of the company’s progress potential investors. Additionally, a well-designed virtual data room can allow administrators to track user activity for example, which documents are most often viewed or how long each document is viewed for to help inform follow-up conversations.
