As a founder of a startup looking for financing, you must be ready to provide investors from equity like venture capital firms and angel funding with the information they require to conduct due diligence in fundraising. This is the time where interested parties examine the company to verify important details and metrics, satisfy investment criteria, and investigate possible risks prior to making a investment decision.
In the process of due diligence, VCs will ask for documents pertaining to your business operations, financials, legal, taxation and compliance. Due diligence can be speeded up and delays will be reduced by having these documents easily accessible. A VDR can allow you to store these documents, offer instant access to them, and manage permissions to control who sees what, ensuring that your sensitive information is only shared with the people who you would like to see it.
You can speed up due diligence by using other tools in addition to the VDR. You can set up a system to automatically upload key files into an well-organized folder. This will ease your work as you will no longer have to manually gather and upload documents. It is beneficial to establish a schedule of when each document will be required, so that the VC can be aware of when you are ready to upload the documents.
Another method of preparing for due diligence is to train your gift officers on fundraising due diligence. This includes gift acceptance policies. This could include preparing an inventory of trigger criteria that, if met will require a thorough risk rubric. Some examples are international opportunities as well as scandals or crimes which are well-known to the public and solicitations that exceed a certain dollar amount, such as name-based donations.