If you are a founder of a new business looking for funding, you need to be prepared to provide investors in equity like venture capital firms and angel funding with the data they require to conduct due diligence in fundraising. This is the time when interested parties investigate the business to confirm key information and metrics, meet the criteria for investment, and research potential risks before making an investment decision.
In the process of due diligence, VCs will ask for documents related to your business operations, financials, taxation, legal, and compliance. Due diligence will be speeded and delays reduced when these documents are easily accessible. A VDR can help you store these documents, allow immediate access to them and manage permissions so you can control who sees what, ensuring that the information you are privy to is only shared with those you want to see it.
You can accelerate due diligence by using other tools that complement the VDR. This includes setting up a system that automatically uploads important files into an organized folder. This will decrease the amount of work to complete, since you don’t have to manually gather and upload documents. It is also helpful to develop a timeline of when you’ll need to submit each piece of documentation, so that the VC knows when you are ready to submit the documents.
Training your gift officers in due diligence in fundraising and gift acceptance guidelines is another way to ensure that you are ready for the due diligence process. This can include developing an appropriate trigger list of criteria that, if satisfied will require a more comprehensive risk rubric, for example international prospects, known crimes or scandals, and solicitations that exceed an amount of money and gift cards that are named.