As the founder of a startup that is seeking funding, it is essential to be ready to provide investors with equity funding, such as venture capital firms or angel funding the information needed for due diligence in fundraising. This is the process where interested parties investigate a business in order to confirm important metrics and information that meet the investment criteria and investigate possible risks before making an investing decision.
During the due-diligence phase, VCs may ask for documents regarding your business, such as taxation, legals, financials and compliance. Being able to access these documents will expedite the due diligence process and cut down on the amount of time. A VDR can help you store these documents, offer instant access to them, and control permissions to limit who has access to what, making sure that your personal information is only shared with those you wish to view it.
In addition to the VDR, there are other tools you can utilize to speed up the due diligence process. You can set up a system to automatically upload important files into an organized folder. This will cut down on the amount of work to do, as you won’t have to manually collect and upload documents. It is beneficial to make a schedule of the dates each document will be required, so that the VC can be aware of when you are ready to do so.
Another way to prepare for the due diligence is to train your gift officers on fundraising due diligence. This includes gift acceptance policies. This can involve creating the list of triggers which, if satisfied requires an in-depth risk rubric. Some examples are international opportunities and scandals or crimes that are that are publicized, and solicitations that exceed a certain dollar amount, such as naming donations.