Avoiding Data Room Setup Pitfalls
A safe, user-friendly virtual data room is a must for any startup hoping to speed up the process of fundraising. But creating the right VDR is not without its challenges. By following these best practices, you will avoid the most frequent mistakes.
Too much information
It’s tempting to include all relevant information in a data room stage 1. However, this could distract investors and diminish the impact of important information. Remember that not all data are equally important. Investors in stage 1 don’t have to have access to cap tables and shareholder certificates.
Poor document structure
Make sure your files are labeled and organized prior uploading them to a VDR. This will help acquirers understand the content and structure documents more easily. Users will find it easier to find files if they employ an established filing system with consistent file names and tagging or indexing systems. The use of summaries and outlines can assist users in understanding complicated documents. Also, having a clear procedure for the removal of old files will help reduce clutter and improve the overall user experience.
Overstating security
Some companies claim that their secure data room is ultra-secure. It’s like a food company boasting about the nutritional value of their cereal bar as it’s low in fat while they should be focusing on whether the product is suitable for the market it’s intended to serve.
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