Due diligence is an important step for founders of startups in their endeavor to raise capital. A virtual data room offers entrepreneurs complete control over the information they give investors, as opposed to email. Utilizing Folderit startups, founders can ensure that their investors receive only the files they need to view and nothing more.
The content of a startup’s investor data room is different based on the industry, but most contain documents that are relevant to the due diligence process. For instance the life science industry will need to include the results of clinical trials and HIPAA compliance information. These documents are usually too large to be shared via email. A virtual data room is the best way to share these documents with investors.
Investors perform due diligence to evaluate a startup’s potential and reduce their risk. having all the information they need in one place makes the process easier and makes it easier for them to make a choice. It also shows the founders are taking their investors’ time serious, which is essential to the majority of backers.
Because of investors’ tight budgets, it’s essential that startups choose a provider with a flat-fee structure. Startups who are still fundraising will benefit from a per-page model for text documents. This is cheaper than a subscription-based model with unlimited storage and users. Also, a free trial is a great opportunity for startup founders to test their service, practice reenacting presentation scenarios with their investors and outline their document’s layouts.