A investor or VC has expressed interest in your startup and you are looking to move forward with the investment process. This is the moment where a virtual data room is required to present more comprehensive documents on your business model, strategy as well as financials, traction and other. The vast amount of documentation needs to be organized and tracked, as well as easily accessible. A private equity platform can offer this feature, and it is crucial to search for a service that offers security and tracking as well as granular permission controls to ensure that the right data is placed in the hands of the proper individuals.
Investors will also likely need to review your documents of incorporation along with shareholder agreements and the consolidated balance sheet. The information available in a virtual environment will streamline due diligence process, leading to an easier decision and a quicker term sheet presentation. Furthermore, if your investors are in the same business or network and have this information available, having it at their fingertips will help them build confidence in you and your company.
You should only include relevant and current documents in your investor data room. Include irrelevant or outdated information to slow down the review of the investor and create confusion. It’s a good idea include a brief messaging or commenting feature in the virtual data room, so investors don’t have to quit the platform to ask an inquiry or to decide whether or decision that’s not.