How to Raise Venture Capital: Due Diligence and Process Preparation

starting line smallIf you’re following along with our series of posts on the venture capital fundraising process, the next step in the process is to prepare your due diligence material.

This step is often skipped in the fundraising process, but the more you prepare for the offering before starting outreach, the quicker and more seamlessly it can go. However, since many companies desperately need the capital they’re trying to raise, company management often tries to jump the gun here.

One of the best pieces of advice related to raising money is to prepare thoroughly before you make the first call or send the first email.

For instance, it can take several weeks to prepare for due diligence so it is important to start preparation early. Create a virtual data room (VDR) to organize all relevant documents in a way that will make it easy for investors to conduct their due diligence.A VDR can protect the confidentiality of your company’s important data by ensuring that potential investors cannot print, save, or download the documents. Be sure to get all of your documents loaded into the VDR in advance and permissioned properly so that specific groups are able to access only the information you give them permission to see.

Keeping track of the process is also crucial to stay organized and in regular communication with potential investors. If you are not using a banker, you should consider purchasing a deal flow management tool to stay on top of the process.  Sometimes these fundraising could entail outreach to 70+ investors, which is difficult to keep straight without a tool of some kind.