Venture Capital Funding has reached a decade-high $155 billion in 2017. Projections show robust growth in startup investments in the succeeding years. The main goal of a startup is to raise funds quickly to keep the ball rolling. The information must be exchanged swiftly and concisely to maintain momentum in the funding process.
Virtual Data Rooms (VDRs) can provide a platform where startups can present and share data with potential stakeholders of the company. It is a secure portal that can store critical information and share it with people who matter.
Serious investors would want to perform due diligence. They would expect that the startup would have a VDR that can expedite the process. No one has the time to sort through tons of unorganized files.
If you are about to send a proposal to an investor, give an excellent first impression by having a VDR in place. Here are more reasons why a VDR amps your chance of getting that much-needed investment.
- It Saves Time
A startup’s secret weapon in fundraising is its licenses, intellectual property information, and financial statements. These are the first documents that an investor would want to examine. Keeping them all in a VDR will allow instant access by crucial people so they can already decide if the startup is qualified to proceed to the next step of funding.
Virtual Data Rooms can be accessed anytime. No one has to wait for meetings to answer questions or review reports.
- It Provides Security
Those who have access to the VDR can discuss and review data on a safe space. In the course of due diligence, startups can confidently share sensitive data without critical information falling into the wrong hands.
Virtual Data Rooms have security features that prevent screenshots, printing, or copying of any part. It has different levels of permission that can be granted only by the VDR administrator.
- It Provides Transparency
Any investor would want to know the financial state of the business that he plans to invest in. They must always be up to date on any changes in the financial capacity and liabilities of the startup. Their main concern, understandably, is getting their money’s worth. Having a VDR gives investors peace of mind knowing that they can view and crunch numbers anytime.
- It Effectively Facilitates Due Diligence
Due diligence is the heart of funding success. When data is organized and updated in real-time, investors will know that you are capable of managing your business and their investment.
It also facilitates legal compliance. A VDR is programmed to record even the slightest changes, so you have a digital record of all transactions.
- It Saves Money
Gone are the days when a startup founder needs to travel back and forth to provide the necessary documents or discuss the business with potential investors. Since transactions and discussions happen online, travel and logistical costs lessen.
There is also no need to print tons of documents. It saves money while reducing the carbon footprint, too.
In the world of startups, funding is the name of the game. Putting your A-game at all times gives you a better chance of closing a deal. How you present and value data says a lot about what kind of business partner you will be.