As a startup founder seeking financing, you must be prepared to provide investors from equity, such as venture capital firms and angel funding with the information they require for due diligence in fundraising. This is the process by which interested parties look into a business to confirm key metrics and details that meet investment requirements, and study potential risks prior to making an investing decision.
During the due-diligence stage, VCs may ask for documents regarding your business, such taxation, legals, financials and compliance. Being able to access these documents will speed up the due diligence process and reduce any delays. A VDR can help you store these documents, provide instant access to them and manage permissions to control who can access what, while ensuring that your sensitive information is only shared with those who you would like to see it.
In addition to a VDR in addition, there are other tools that can be used to accelerate the due diligence process. For instance, you can set up an automated system for uploading key files to an organized folder. This will reduce the amount of work you need to complete, since you won’t need to manually gather and upload documents. It is helpful to create a calendar of the dates each piece of documentation will be required, so that the VC will know when you are ready to do so.
Training your gift officers on due diligence in fundraising and gift acceptance policies is another effective method to ensure that you are prepared for the due diligence process. This could include preparing an outline of trigger criteria which, if satisfied, will require an in-depth risk rubric. Some examples are international opportunities as well as scandals or crimes known to the public, and solicitations exceeding a certain dollar amount, like name-based donations.