A reliable investors’ data room for startups supports more than 25 file formats. This gives you full control to keep your data private. Check its main facilities in the article below.
Increase Startup Capital with the Virtual Data Room for Investors
As a startup, you will most likely need financial investment to get the company up and running. To raise capital, you give away a stake in a company to either angel investors or VCs in exchange for their money and advice. Like auditing, transparency is essential. Companies need to create, share, store and manage large volumes of documents.
Capital investments can have a positive impact on your startup, but you have to be careful because they can also be disastrous. If you are planning to attract investors, start by deciding how much money you need to raise and how investors will impact your business. Once you know this information, decide how you will raise capital.
The developers recommend using investors’ VDR for startups and critical business activities. The analysis can be carried out independently with the help of industry publications and resources, search engine statistics, official resources with financial information, and so on. For a data room for investors, the company must have a data room ready, which includes:
- corporate documents, charters, and so on;
- financial reporting and bases 1C;
- comparison of compliance of management and accounting reports;
- patents and registration data for all intangible assets;
- documents in which relations with developers are correctly drawn up, and job descriptions.
To test a product and market, it is not necessary to open a company or register an individual entrepreneur, with the exception of highly regulated markets like finance and healthcare. For example, if a startup plans to provide telemedicine services, then a license must be obtained; otherwise legal, including criminal, liability may arise.
The Main Reasons for Using Investor Data Room for Startups
When all important company documents are housed in one centralized space, it is much easier to set up the functions of the electronic data room and eliminate organizational confusion once and for all. The tools available in this repository are also important for outside investors. Show them data in a personalized, easy-to-understand way.
The startup needs a virtual data room for investors because it represents:
- A multi-level security system prevents unauthorized access and hacker attacks.
- Implementation of contacts with investors, and participation at all stages of negotiations.
- Advise the client on the terms of the transaction during the signing of the documents.
- The possibility of bulk uploading without restrictions on file size, quantity, and format.
- An automatic index numbering and full-text searching.
- They track any user activity, which minimizes the risk of “leakage” of information.
It is impossible to prepare for a startup with the investor data room quickly. Start investing in legal clearance gradually as project funding increases. At the pre-seed round, it is enough for the investor to formalize the relationship between the founders and conclude agreements with the team. In Rounds A and B, the investor will want detailed paperwork for all sections.
Using an investor virtual data room for startups allows a centralized access point to have attorneys, accountants, internal and external regulators, and other stakeholders. Providing a central system reduces errors and time. In addition, it ensures transparency of communication. Depending on the type of audit, the level of access and authority varies.