How to Speed Up Fundraising Due Diligence

As a founder of a startup looking for financing, you must be prepared to provide investors in equity like venture capital companies and angel funding with the information they require for due diligence in fundraising. This is the method by which interested parties study a company to confirm key metrics and information that meet the investment criteria and study potential risks prior to making an investing decision.

During the due diligence process, VCs will ask for documents related to your business' operations, financials, legal, taxation, and compliance. The availability of these documents will expedite the due diligence process and minimize the amount of time. A VDR can allow you to store these documents, provide instant access to them and manage permissions to control who can access what, while ensuring that your personal information is only shared with those who are the ones you want to access it.

In addition to the VDR, there are other tools you can employ to accelerate the due diligence process. You can create a system that will automatically upload important documents into an well-organized folder. This will decrease your workload because you won't have to manually gather and upload documents. It is useful to develop a calendar of the dates each piece of documentation will be required, so that the VC will be aware of when you're ready to upload the documents.

Another way to prepare for the due diligence is by training your gift coordinators in fundraising due diligence. This includes gift acceptance policies. This can involve creating an outline of trigger criteria which, if satisfied, will require an in-depth risk rubric. Examples include international prospects and scandals or crimes that are which are well-known to the public and solicitations exceeding a certain dollar amount, which includes name-based donations.


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