A data room is a central location for sensitive information about business transactions. It is safe data room for business and only accessible to individuals who have access rights. It also has advanced features that facilitate participants to collaborate and ask questions. This keeps the deal moving and prevents critical information leaks when doing due diligence.
The first step in creating a data room is identify all the documents that you will need to include like financial statements, legal agreements and intellectual property. Once you’ve compiled a list of documents, you’ll need to organize the documents into folders or subfolders to make it easier to navigate. For instance, you may decide to create an “Competitive Analysis” folder that showcases your research and analyzes your product or service against competitors. Include the “Customer References and Referrals” folder to highlight the positive feedback of your customers.
For startups, a data room can help in raising capital and to navigate M&A processes. It’s an easy way to make available investor material including your pitch deck, terms sheet and the most recent funding round. This will allow potential investors to get a better understanding of the value your business has created and will accelerate the process of fundraising.
A few of the most well-known virtual data rooms include VDRs from Firmex and Intralinks. Both provide a variety of security options including watermarking and two-factor authentication. Firmex also has an option to monitor usage that lets you see who is examining which documents and when.
