Shift in Investor Funding
With the increasing strength of more angel firms and the joining of forces between VC, PE, and Angel funds, the venture community is starting to shift. In addition, changes in the industry, such as crowd funding and the US JOBS Act, signed in April of this year, are making it even easier for startups to get funding, causing VC and PE firms to adjust their way of doing business. With more regulatory pressures, firms need to keep an accurate record of their communications with portfolio firms. At the same time, portfolio firms are sending an increasing amount of information to investors.
The swelling of legal documents, board packages, and other materials being sent requires significant organization. Keeping communication flowing between all partners becomes time-consuming, not to mention the increased chance that important information might be stuck in someone else’s email or laptop.
With the shifting in investment patterns, there are bound to be growing pains as companies adjust to the new influx of paperwork, reports, and communications. DocDep has been hearing a common thread of “pain points” among our clients. Over the next 2 weeks, the DocDep blog will be focusing on alleviating these pains.
Pain #1 – Inadequacy at seeing a complete view of investments
As mentioned, the amount of documents that need to be stored is increasing. Email folders or other storage repositories are not sufficient.
- I can’t get to the information! It’s in someone else’s email or hard drive.
When important information is stored in personal filing systems, major issues can result. Whether information is needed urgently or last minute or staff turnover has occurred, portfolio company materials needs to be accessible. One way to alleviate this pain is to use a system that allows for secure, multi-user login.
- My storage tool does not provide an organized structure for me to view, sort, and filter.
Although email folders and hard drives provide storage, they lack an organizational structure. The information may be there, but it can still be hard to find. There is no way to sort and filter or get an overview of the entire portfolio. Using software that provides a pre-defined organizational format allows you to see what kinds of documents you have stored. Sort and filter functions are a great ways to view investments by what stage they are in what information is most recent, or how the portfolio is doing sector by sector.
- I can’t easily get a complete picture of all my portfolio companies. I can’t get a quick overview of their information and financial documents.
Again, even though the documents are stored somewhere, that does not mean that they are easy to find. It also may not be easy to put them together to get a complete view of how your investments are doing. Finding and analyzing financial documents becomes an especially time-consuming and manual process. Using a tool that allows snapshots of information for investments and documents is a great way to remind yourself of key information that you would need. A bird’s eye view of financials helps with updates, capital calls, and other financials.
DocDep’s Sonar product lessens these pains for VC, PE, and Angel firms. Download our checklist to see if your current storage system is doing its job! Follow the next 4 posts to see the rest of the pains we help reduce.