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Introduction
Raising funds is especially imperative for healthcare and biotech startups because of the high cost and complexities involved in bringing life science products to market. The right investors at the right time can lead to immense success amidst strong competition and market saturation. Investors, however, want to minimize risk while capitalizing on the opportunity to invest in a company with huge potential upside.
What is the Purpose of a Virtual Data Room?
A Virtual Data Rooms (VDR) is an industry standard tool designed to centralize and securely share sensitive information with external entities such as investors, legal teams, partners, and others. This information must be shared with the utmost concern for security while being easily accessible Choosing the right VDR solution can make the entire process efficient and seamless.
What should be in a Biotech Data Room?
A solid financial plan, pitch deck, IP ownership documentation and other sensitive documentation is required to demonstrate the investment proposition. This information is highly sensitive and needs to be shared selectively with multiple stakeholders often with different levels of access and visibility. Given the dynamic nature of audience and content, managing access to information becomes complex. The table below highlights the different types of content that will be shared throughout the fundraising process.
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Stop spending on purchasing expensive Virtual Data Room (VDR) solutions. Use Govern 365 to quickly create Microsoft 365 data rooms or SharePoint online data rooms.
What is a Data Room for Fundraising?
Fundraising Documentation and Data Room
| Documents | Contents | Sensitivity Category |
|---|---|---|
| Corporate Documentation | – Company Formation documents – Founders\Shareholders\Stock Issuance\Confidentiality agreements – Material contracts – Employee agreements | – PII – Company confidential and legal documents |
| Pitch Deck | – Problem Statement – Solution – Market Overview – Competitor Analysis – USP – Marketing Plan – Traction – Intellectual Property – Team – Milestones Plan – Financial Data – Offer for Investors | Company business plan |
| Online profiles and media | Registering your company on major startup-investor matchmaking platforms like AngelList, F6S, and others | Public information |
| Financial assumptions model and cap table | – Cash burn rate – Aggregated investments – Cap table – Option pool – Round size – Pre-money valuation – Post-money valuation – Key KPIs | Company financial information |
| Regulatory compliance | – Quality control processes and documentation – 21 CFR Part 11 compliance – Regular audit reports – Employee training records | – FDA – ICH – WHO – Other national regulatory bodies, e.g., EMA, Health Canada etc. |
| Business development plan | – Market size and growth potential – Key competitors and their strengths and weaknesses – Marketing strategy and cost to execute – Existing partnerships, if any Sales cycle analysis | GTM strategy |
| Term sheet and associated documents at an advanced stage | – Shareholders agreements – Subscription agreement – Deed of accession – Prospectus (for public raises) | May include sharing of 3rd party information |
| Intellectual property | – Patents, trademarks, copyrights, and other intellectual property (IP) – Licensing agreements or IP-related partnerships – A clear statement about freedom to operate (FTO), to show investors that any existing IP or other pending filings are not there to represent a competitive threat – IP protection strategy, including non-disclosure agreements (NDAs) – Any pending or potential IP litigation | Core assets of the organization |
| Scientific or Clinical data | Phase 0 clinical trial as first milestone Sufficient explanations of the methods and takeaways from any analyses or publications A supplemental slide deck summarizing the data | Highly confidential and technical information |
All of these are part of the due diligence process during fundraising. The level of details will vary depending on the funding stages and the funding sources. Refer to our blog for more details about due diligence in general.
There is an in-depth article by Morgan Cheatham, Vice President with Bessemer Venture Partners investing in healthcare and life sciences, which says “The best data rooms are concise, accurate, high integrity, and ultimately make it easy for an investor to write an investment recommendation.”
It is therefore, well taken that an effective VDR would go a long way in managing biotech fundraising but what about its cost?
You need to optimize on your existing investment and evaluate your options. If you are invested in Microsoft, evaluate Govern 365 – an affordable and scalable offering from Netwoven including a VDR and much more.
Why Govern 365?
Govern 365 empowers users to quickly request a VDR and have a fully functional workspace in under 10 minutes. It runs on the host organization’s SharePoint Online tenant to provide complete data sovereignty and reduce operational costs.
Each Govern 365 VDR is created using a template which features branding, logos, standard folders, and standard permissions that expedites the setup process. Once content is uploaded in the appropriate locations, external users can log-in using their own corporate credentials. They do not need to memorize a separate username/password.
Files protected using Govern 365 VDR’s can only be opened by authorized users. Unauthorized users will be met with a denial of access, even if the file has been downloaded and opened locally. Authorized users can work with files according to their permission level so that you can remain confident that your sensitive information is safely being viewed with minimal risk.
Conclusion
Sharing sensitive information with investors is an eventuality that you will face when hoping to raise funds for your organization. Doing so securely can ensure that you retain your competitive advantage. User Govern 365 Virtual Data Rooms to confidently raise funds for your life sciences projects, medical products, or novel technologies. Maintain data sovereignty by hosting your own content and prevent data leaks while reducing your operational costs.
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