A secure, easy-to-use virtual data room is a must for any startup hoping to speed up its fundraising process. However, establishing an effective VDR is not without its problems. By following these best practices, you will avoid the most common mistakes.
Too too much information
It’s tempting to include all relevant data in a data room stage 1. However, this can distract investors and reduce the impact of crucial information. Keep in mind that not all information are equally important. Investors at stage 1 don’t need have access to cap tables and shareholder certificates.
Poor document structure
Make sure that your files are organized and labelled before uploading them to the VDR. This will make it easier for the acquirer to understand the structure and content of your document. Users will be able to find files if they employ a standard filing system, consistent file names and tagging or indexing systems. Also, using summaries and diagrams of key elements will assist users in understanding the complexity of documents. Additionally, having clear guidelines to eliminate outdated files will prevent unnecessary clutter and enhance the overall user experience.
Overstating security
Some companies claim that their secure data room is ultra-secure. It’s the same as a cereal bar manufacturer bragging about its nutritional dataroom for due diligence value since it contains zero fat while they should be focusing on the quality of the product and whether it is suitable for the intended market.