The fundraising process is changing, today companies need an effective method to stand out from the crowd. When preparing for the fundraising process, a virtual data room could be a very useful aid. The fact is that a quality strategy is important in the IPO process, and VDR will help your limited partners get to know you better. It will save you time and show your true serious intentions, which will also motivate your LPs to keep investing in you. In this article, we’ve compiled tips on how to create a free data room.
Work on your strategy
You’re nowhere without a strategy; if you don’t have material to lean on, the process of creating your data room can take a lot longer, if not fail altogether. So, what you need to do:
- Create two different data rooms, one with low-risk shared files and the other with more sensitive data. This will help your potential partners adapt faster in the space and make it easier for them to access the information
- You should ensure that your previous investors or firms are willing to validate your investment list
- Communicate with organizations you’ve invested in before and make sure they can consider you as their investor
Open source virtual data room – its benefits
Open-source virtual data room is a unique tool capable of handling up to 100,000 contracts at a time. The platform is a fully web-based SaaS solution which gives it flexibility and easy access to the information you need. Also open source VDR guarantees efficient speed of functions and settings, optimized processes, and deep reporting.
Creating a data room based on open source is very simple and fast.
Tell your story
The Data Room is the place where you can accurately control your foundation’s story. You need to:
- Tell important points from your fund’s history in the VDR, and also say a few words about why you started this firm and the partnership, investment, and support of the portfolio company. In general, what you needed the fundraising for
- There needs to be the context for each data point. A dry table of investments will look very unplayable. Form your context, which investments are better, which are neutral, and which need additional support
- Describe your challenges and highlight your accomplishments. Your potential LP partners want to know more about you so they can be sure they want to continue working with you
A quality data room should use document templates in various areas whenever possible. The standardization process will help you make sure your VDR fits industry expectations and is readable:
- Use the generated templates used by the LP community, make sure your data room has an Institutional Limited Liability Association (ILPA) due diligence questionnaire template
- Consult with your lawyer about your fund’s readiness so you can make sure you are following all the policies and rules
What should you include in your data room?
You can include the following in your VDR:
- Pitch deck – It helps your LP partners present a picture of you and the outcomes of investing in your fund. This presentation should be no more than 10 slides and should highlight your fund
- Letters of record – try to be as transparent as possible at this point, the track record should include all the details of your previous investments
- Checked reports
- A due diligence questionnaires
- Past investment notes