Using a Virtual Data Room for Fundraises

A virtual dataroom (VDR) is an online repository that allows you to save and share confidential documents in high-risk transactions. These deals can include mergers, acquisitions capital raising, IPOs, divestiture or any other transaction where due diligence is required. VDRs are used by companies across a range of industries, including healthcare, financial services and IT.

In the course of fundraising during the fundraising process, you should provide investors with supporting documents to support your bigger story. The details of this story will differ depending on the stage your business is at however, it should be focused on driving a needle-moving investment thesis for your business.

For instance, a young company might focus on changes in the market, regulatory shifts and your team. A growing stage business could concentrate on the most important clients and relationships, product extensions and new markets.

After you’ve established the best structure for your investor data room, you must be careful not to overdo it by providing too much information. This could slow down the fundraise, and cause a lack of momentum. The best way to avoid this is to rely on the framework described above and also be prepared to share additional information that are relevant to the investment thesis your company is trying to make.

While it might be tempting to use file-sharing apps for free such as Dropbox or Google Drive to store your investor data room, these platforms don’t offer the same security and auditing capabilities that a dedicated virtual data room offers. This includes permission settings and watermarking in addition to the ability of tracking the types of documents that data room are accessed.