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A virtual dataroom (VDR) allows investors to share secure documents and other information online. This tool can help startups streamline due diligence and establish trust with investors throughout the fundraising process. By eliminating the need for email exchanges as well as streamlining due diligence, startup founders are able to focus on generating leads.

Startups often struggle with deciding what information they should include in their data room as part of their investor due diligence. If they include too little information, they risk not being able to answer questions investors might have. Too much information and they could be overwhelmed. Fortunately, the right VDR provider will make it easy to prioritize and organize important documentation like financial projections, forecasts, business plans, cap tables and more to help with effective due diligence.

In addition to the financial documents, founders of startups should also provide a thorough competitor analysis. This section should show that the startup is well-informed about its marketplace and its immediate competitors by highlighting key differentiators like prices, features, and customer satisfaction ratings. The startup should provide any market research that it conducted, as well as any public reports that back up its claims.

The startup should also include the articles of incorporation, as well as any updated or revised versions. This can prove the startup’s legitimacy and provide a more precise picture of its ownership structure. When choosing a virtual data space for startup fundraising, look for a provider that offers a no-cost trial or demo to try the software and practice reenacting the presentation to investors. Find a company that has flexible pricing plans that allow you to grow to the growth of the business through subsequent rounds of transactions and financing.