Fundraising Data Room for Investors

How to Prepare Data Room for Fundraising

VDR is a software that is used for different business purposes. Virtual data room for venture fundraising has a special structure, which is the most convenient for potential investors and limited partners. A fundraising data room is using for organizing the necessary information about the company on the one highly secure online space in order to ensure effective communication with prospective limited partners (LPs). Tech flexibility and ease of use of online data room software facilitates and improves the effectiveness of the fundraising process and solves the issues of the exchange of confidential data and anytime access from anywhere in the world.

In order to highlight the professionalism and attract more partners, companies choose VDR business software that is well known as the most secure online platform for document flow. After you choose the best data room provider, you should follow several simple steps of preparing fund data room:

  1. Set up a virtual data room.  
  2. Organize a convenient structure of virtual data room for fundraising.
  3. Upload the documents according to the fundraising checklist below.
  4. Set the access rights to all potential users.
  5. Send a unique access link for fundraising data room to limited partners, investors, or other 3rd parties.
  6. Conduct the fundraising: keep the discussion within the virtual data room, track activity, sign the agreements.
  7. Systematically update the relevance of the documentation and check the relevance of user access levels.

What should be in an Investor Data Room

The fundraising checklist contains a list of basic documents that need to be loaded into your virtual data room and segmented according to the indicated categories for the convenience of limited partners (LPs). Gather all documentation according to the following fundraising checklist and upload all the data to your data room according to the sections:

Investor Virtual Data Room

Company Summary

  • Strategy 
  • Branding guidelines and vision
  • SWOT analysis
  • Disaster recovery plan
  • Interest-bearing of a private equity
  • Sales process pipeline

Stock Documentation

  • Institutional Limited Partners Association compliance
  • Socially Responsible Investment policy
  • Private Placement Memorandum
  • Environmental, social and corporate governance policy
  • Private Placement Memorandums and Schedule of previous funds
  • Due Diligence Questionnaire
  • List of key contacts

Investment Strategy & Process

  • Voting agreements
  • Investor rights agreements
  • First refusal & co-sale agreements
  • Stock purchase agreements
  • Preliminary and Final Investment Recommendations
  • Incomplete investment chart
  • Investment Guide
  • Capitalization table
  • Investment/ exit LP notification
  • Compensation Agreements

Staff Structure

  • Organization structure chart
  • Team Summary (employees, titles and salaries)
  • Staff turnover
  • Employee agreements
  • Future hiring
  • List of contractors

Intellectual Property

  • Granted and filed patents
  • Trademarks
  • Intellectual Property strategy

Financial Affairs

  • Profit and loss statements
  • Pro-forma statements for next year
  • Projections
  • Management company budget
  • Quarterly and annual plans
  • Portfolio Companies Internal Reporting

Market Research

  • Competitive market analysis
  • Internal Market Reports
  • Third-Party Market Reports

Legal Affairs

  • Long Term Power of Attorney Project
  • Non-disclosure agreement

How does using VDR improves the fundraising process

Using modern data room for venture fundraising you not only optimize your business processes but also position yourself as a professional partner for your potential investors. In the process of communication with investors, you send a unique link to access your fund data room, where a potential partner can get acquainted with all the necessary information about your activity, ask questions and make a decision on cooperation. This method of communication significantly optimizes working hours, as all the necessary documentation is in one place. The function of categorizing folders ensure the easy search of the necessary documents for future limited partners. 

It is not recommended to use free cloud services for storing and sharing confidential information. First of all, using Google Drive or Dropbox does not guarantee the confidentiality of data. Virtual data room software is the best data room fundraising tech that provides Granular Permission Settings, Two-Factor Verification, Fence View, and many other functions that ensure high security. Learn more about the security standards of VDR software

Personalized customization and intuitive interface ensure the effective cooperation between startup companies and investors or limited partners. The opportunity to create a folder structure facilitates the user experience and ensures clean and easy navigation for investors. In the fundraising data room, you can set up the right of protected viewing, read-only rights for the 3rd parties in order to prevent the downloading or editing of your company data. Create separate data room access for each investor so you can tailor the content.