Data Rooms for Fundraising: What to Know and How to Get Started

| Updated on February 27, 2024

Dataroom software has become irreplaceable in M&A processes, and now they are becoming an important component of due diligence and fundraising for startups. To increase their chances of success, start-up companies attract capital through transparency and maximum openness to investors, not forgetting the issues of data protection and confidentiality. This is exactly what virtual data rooms offer, becoming the main platform for making important financial decisions. To learn more about VDR check here:

What is a Virtual Fundraising Data Room?

Although VDR technology for fundraising is increasingly used in business, not everyone uses it. What is a virtual data room? It is software used for secure storage and exchange of documents, as well as for online discussions, conferences, and even conclusion of agreements since the functionality of most VDRs involves working with electronic signatures.

Such software is necessary for effective interaction with partners, quick decision-making, and transparency of business operations. According to statistics, raising funds with the help of virtual data rooms has a higher KPI compared to traditional methods of raising funds and establishing agreements with financial partners.

Top Reasons to Use VDR for Fundraising

Using VDR solutions to attract investments is not just convenient. Such a way has many other benefits:

  • Enhanced security. All the information you store in the virtual data room is securely protected to the highest standards. You can be sure that your business plan or presentation will not fall into the hands of third parties, and no one will have unauthorized access to it.
  • Good management and organization. You can give partners a large portfolio of documents for review and review, but at any time there may be a need to provide additional data or quickly discuss the documents you have shared. And all this can be arranged when you use the services of It is fast and convenient, even if your investors are currently in another corner of the world, and holding a meeting or exchanging documents quickly in another way seems like an impossible task.
  • Quick feedback and closing the deal are what can be decisive for the development of your business. Fundraising with VDR helps you avoid downtime and get your product to market when it’s most in demand.
  • Transparency of interaction. You openly demonstrate your preferences and needs, plans, and benefits. Accordingly, your partners have the opportunity to give you more informed feedback, perform enhanced due diligence, and create the best impression of your startup.

Thus, data room services allow you to move forward faster, gaining significant advantages over competitors who still do not use VDR and cannot offer their partners the same speed, transparency, structure, and convenience.

Setting Up an Electronic Data Room

Online data room software allows you to customize the data room according to the unique needs of the company. For this reason, it is first of all necessary to determine the purpose of the project and the advantages that the startup is ready to present to investors, attracting funds for further development.

First of all, you need to choose the data room software that can provide you with the tools you need. After that you need:

  1. Build the project structure, and distribute documents in different folders. 
  2. Grant permissions and access to different groups of users. 
  3. Personalize the virtual room and presentation specifically for a particular investor.
  4. Invite participants to the VDR. 

By the way, you can also conduct all discussions and meetings using the VDR solution, because conference functions and the use of electronic signatures are also present within such systems.

Top Things to Include in a Virtual Data Room

You can include in virtual data rooms any options you need for efficient and productive work. However, try to think of VDR not just as a set of individual options, but as an effective tool for attracting investment and a way to present the startup at the highest level. Let the room itself speak of your thoughtfulness and organization as core values, along with transparency and specificity. 

  • Reports, forecasts, and other financial documentation. 
  • Current and pro-forma capitalization tables.
  • List of contacts who can provide recommendations or leave feedback on cooperation. 

You can also share other documents, such as:

  • Sample contracts with clients and partners;
  • Patents;
  • Data on press coverage;
  • Product testing results, feedback from early customers

If the company has lawsuits: already closed or still relevant, this information should also be provided to the investor since it will still become known to him from other sources. If you’re open about sharing this information early in the review process, it could be a good move for your company. This will show that you are serious about this process and plan to conduct business openly and transparently, and therefore, the investor will have fewer risks from such cooperation and will more calmly agree to participate in fundraising.

However, do not try to put all the folders and documents you have in virtual rooms. Limit the number of folders to 4-7, so that it was easier to get to know them, and the amount of information provided did not distract from the main task: making a decision on attracting funds and further cooperation.

Try to keep the names of the folders simple and clear, and everything inside them is also organized clearly and structured. In this way, potential investors will immediately see the information and understand where to look for other data.

All virtual data rooms are unique, just like your business. Therefore, take into account the above recommendations, but also consult with your team about what elements are best to add to the VDR and what information will maximize the success of your startup’s fundraising.

Adam Green

With more than 3 years of experience as a software and tech writer on Adam has been writing articles, blogs, and featured stories centered around the software and tech niche since he graduated from Virginia Tech University. He writes savvy articles, tutorials, and reviews that explain difficult concepts to readers of all levels. His expertise includes software development, cybersecurity, artificial intelligence, and emerging technologies. Through simple and engaging writing, Adam constantly delivers useful insights that enable readers to feel at ease in the ever-changing technological scene.

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