As a founder of a start-up 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 when fundraising. This is the time when interested parties look into the company to verify important information and metrics, meet the requirements for investment, and study possible risks prior to making a decision on investment.
In the process of due diligence, VCs will ask for documents related to your business operations, financials, taxation, legal, and compliance. Due diligence can be speeded up and delays reduced when these documents are readily available. A VDR can help you keep these documents, offer instant access to them, and manage permissions to control who can access what, while ensuring that your personal information is only shared with the people you wish to view it.
You can accelerate due diligence by using other tools in addition the VDR. You can create a system that will automatically upload important files to an well-organized folder. This will reduce the amount of work you need to do, as it won’t be necessary to manually gather and upload documents. It is also beneficial to create a timeline of when you will need to submit each piece of documentation, so that the VC knows when you are prepared to do so.
Training your gift-giving officers on due diligence in fundraising and gift acceptance guidelines is another effective method to make sure you are prepared for the due diligence process. This could involve preparing the trigger list of criteria that, if met will require a more comprehensive risk rubric, for example international prospects, known crimes or scandals, and solicitations exceeding the threshold of a certain amount in dollars, including the naming of gifts.