Due diligence of investors is a critical aspect of capital raising and having the right information room for startup will help founders cut months off the fundraising process. Investors can quickly evaluate the company’s records and make informed decisions when all the information is centralized in an electronic repository.
All this information is in one place. It allows startups to also demonstrate their value proposition. It forces them document aspects of their business that were previously only within the founders’ heads for example, customer acquisition plans and development of products. The process of making preparations for an investor or acquirer’s due diligence could aid a startup to see their own business through the eyes of others, which can be valuable to any future management team.
The best virtual datarooms designed for startups offer a regulated, but easy access to a variety of relevant and current information. They also offer advanced features that help streamline the fundraising process, including customizable NDA templates and central storage of files. Startups can even link their virtual data rooms to existing tools used for business operations, like cloud storage, file sharing services and mobile apps to ensure a seamless experience for investors.
Typical documents included in a data room designed for startups include an investor presentation (also called pitch deck) along with strategy documents and key performance indicators (KPIs). In addition to the above startups should think about including market research reports, testimonials or surveys, and information on customer retention and satisfaction. Startups should keep their data room updated as their business grows, to give an accurate picture of the company’s progress to investors. Moreover, a good virtual data room allows administrators to track user activities for example, which documents are most frequently viewed or how long each document is being read, which can help inform follow-up meetings.