A virtual data room that is simple to use and secure is crucial for any startup that wants to speed up their fundraising. However, creating a successful VDR is not without its challenges. Most common mistakes can be avoided by ensuring the following best practices are in place:
Too many details
It’s tempting to include all relevant data in a data room stage 1. However, this could distract investors and dilute the impact important information. Be aware that not all of the data are equally relevant. For example, investors at stage 1 do not need access to cap tables or shareholder certificates.
Poor document structure
Make sure your files are labeled and organized prior to uploading them to a VDR. This will make it easier for buyers to comprehend the contents and structure of your document. For example, using an organized filing system that has consistent file names and the use of tagging and indexing systems will make it easier for users to locate documents. Furthermore, using summaries or outlines of key points will aid users in understanding complicated documents. Finally, establishing clear protocol for the removal of old files will eliminate clutter and improve overall user experience.
Overstating security
Some companies go overboard with saying that their safe data rooms are secure. It’s the same as cereal bar manufacturers boasting about its nutritional value, since it’s fat-free while they should be focusing on whether the product fits the market it is intended for.