If you are the founder of a startup seeking funding, it’s important that you are prepared to provide investors with equity funding like venture capital companies or angel funding with the details required to conduct due diligence for fundraising. This is the process by which interested parties investigate a business to verify important data and metrics that meet investment requirements, and investigate possible risks before making a decision to invest.
During the due-diligence phase, VCs may ask for documents pertaining to your business, such as taxation, legals, financials and compliance. Due diligence will be accelerated and delays reduced by having these documents easily accessible. A VDR will help you store and access these documents immediately while also managing permissions to ensure that only those who require to see them are allowed to do so.
In addition to the VDR and a VDR, there are additional tools you can use to accelerate the due diligence process. This includes setting up a system that automatically uploads important files to an organized folder. This will cut down on the amount of work you need to do, as you won’t need to manually gather and upload documents. It is useful to develop an agenda of when each document will be required, so that the VC will know when you are ready to upload the documents.
Training your gift managers on fundraising due diligence and gift acceptance guidelines is another effective method to ensure that you are prepared for the due diligence process. This could include preparing an enumeration list of triggers that, if satisfied and if they are met, will require an additional risk-based rubric, including international opportunities, known crimes or scandals, and solicitations above the amount of a certain dollar including naming gifts.