Why Startup Fundraising Needs a Virtual Data Room

A virtual dataroom (VDR) can be an effective tool to protect and manage important documents in business. Startups are increasingly using them to increase the value of transactions and accelerate due diligence. In this article, we’ll explore the advantages of fundraising for startups using a VDR and share some tips on how to build an effective one.

When it comes to investing startups typically have to work hard to convince investors that they are the right fit. As such, it’s important to be as transparent as possible about your business. This will ensure that due diligence doesn’t get prolonged unnecessarily, and that investors have the information they need to make a confident decision.

One method of doing this is by putting together an investor data room. It is a secure, online repository that contains the information that investors need to know in their due diligence. This includes a complete overview of your business (an organizational chart and eventual hiring strategy), financials (income statement, balance sheet, projections, etc) and a cap table that shows all the various purchasing options for useful reference your business, including preferred stock, common stock and convertible debt.

It’s worth including any public reports or market research that highlight your company’s unique position within the marketplace. Additionally, a section highlighting customer testimonials and references can be an excellent way to showcase the value of your team’s expertise is.