Using a Virtual Data Room for Fundraises

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

During the fundraise process, you’ll want to provide your investors with documents that can support your broader narrative. The narrative will differ depending on where your business is in its growth phase, but should always focus on delivering an investment strategy that moves the needle for your company.

For instance, a young company might focus on trends in the market, regulatory changes and your team. A company in the growth stage might focus on key accounts and relationships, product expansions and new markets.

After you’ve established the best structure for your investor data room, it’s vital not to overload it with too much information. This could impede the fundraise and result in the fundraise not moving forward. The best way to avoid this is to stick to the framework above however, you should also be prepared to share additional information that are relevant to the investment argument the company is trying to make.

While it might be tempting to use free services like Dropbox or Google Drive for your investor data room storage However, these platforms don’t offer the same security or auditing capabilities as a dedicated virtual room. This includes watermarking and permissions settings in addition to the ability to determine the number of times a document is used.