Startup founders have a lot to think about when they first enter the fundraising phase of their business. Venture capital firms and angel investors will undoubtedly want to go through a multi-step due diligence process.
While due diligence can vary widely based on the industry and what traits the investors are looking for, it is likely to include investors viewing sensitive company documents and information. It may include sensitive intellectual property, financials, corporate documents and information about customers and suppliers. While it’s perfectly valid for investors to pore over this data to try and determine the potential for your company, you don’t want this information falling into the hands of competitors or the general public.
If your company isn’t already using a virtual data room for startups, it may be time to upgrade your current file storage system, such as Google Drive or Dropbox, to a secure virtual data room. Virtual data rooms (VDRs) provide many benefits over other cloud- or server-based file storage systems, including easy file management, a virtual paper trail and enhanced security.
You Want More Control over File Sharing
Virtual data rooms provide advanced file management technology that allows you to provide — and revoke — access to files to anyone at any time. With Caplinked, you can even create groups of people and offer them the same permissions. If you revoke permissions, they can’t view them anymore.
Track who Views and Edits Your Documents
A virtual data room also gives you the capability to track who views or even edits documents, leaving a virtual paper trail in case of an audit or in the event of personnel changes in the middle of a fundraising round.
Individuals with editing permission can make changes within the VDR platform without having to download Excel or Word documents onto servers or desktop computers, which may be less secure. You can track changes made to documents, so you know exactly who made changes. And, you’ll always be able to access prior versions of a file via the secure server.
Plus, insight into which documents investors have viewed multiple times can help you determine what aspects of your business to emphasize in meetings and how to strategize your next, best business move to gain the funding you need.
Because you control permissions, however, investors don’t have to know who else is viewing specific documents, which gives your organization the competitive edge when it comes to dealing with your prospective investors and knowing the right things to say in meetings.
You Want to Make a Good Impression on Investors
A data room for startups shows investors you are serious about your business. You care about cybersecurity and keeping your IP and sensitive financial data protected. Easy file management also streamlines the due diligence process, giving investors a good impression about your business processes and procedures.
A VDR provides a level of transparency that you won’t find with other storage methods. Through careful file management techniques, you can present data in a way that will appear most favorable for your company, while also showcasing that you have all the available materials investors need to make an informed decision.
As things change with your business, even by the day or the minute, you can alert users to news and data that may inform their decisions regarding funding. This showcases your company’s transparency while speeding up the due diligence process.
A Data Room for Startups Shows You put Security Concerns First
Cybersecurity is a key concern for organizations today, and smart founders will want to show investors they are taking steps to protect mission-critical company data as well as customers’ financial information.
The U.S. Federal Trade Commission reported 1.4 million instances of identity theft in 2020, a spike of 100% since 2019. Experts predict cybercrime will cost businesses and individuals worldwide $10.5 trillion annually by 2025. Cyberattacks have increased rapidly as a result of more people working from home. A VDR adds another level of security to file storage for your organization, so that your files will be protected even with people logging in from various networks.
Organize Your VDR so It’s Easy to Find the Most Important Documents
With so much business taking place remotely today, it’s critical to streamline operations so that people can work independently and find what they need. A VDR makes it easy to store and organize files and folders so that your potential investors can access the data that will help them make an informed decision. Best of all, they can do it with little intervention or questions, so the due diligence process can move forward quickly.
Using the workspaces provided by Caplinked for sharing documents takes just 10 minutes to set up and makes it easy to manage permissions for thousands of files in minutes. Your investors can view documents from a desktop computer or mobile device.
Take Advantage of EZ Q&A Capabilities and More
If your investors have questions throughout the due diligence process, the new EZ Q&A capabilities within Caplinked make it easier than ever to assign questions to experts in your organization and get answers quickly. Your investors will notice how responsive you are to their concerns, which will give them a good feeling about providing the funding you need.
When it comes to securing funding as a startup, every bit of information you share affects an investor’s impression of you and your company. Put your best digital foot forward by sharing the files investors need for the due diligence stage in a data room for startups. Get a free trial of Caplinked for 14 days and see how dedicated workspaces and next-gen security can help you.
Dawn Allcot is a full-time freelance writer and content marketing expert specializing in technology, business and finance.
Jonathan Hung – Due Diligence for Startups
Cybercrime Magazine – Cybercrime to Cost the World $10.5 Trillion Annually by 2025