A virtual data room (VDR) is an online repository that allows sharing of sensitive documents and files. Startups looking for funding can upload confidential revenue forecasts, financial records and IP ownership documents to an investor data room. This allows potential investors to conduct due diligence quickly and take informed decisions.
In the event that they’re looking to secure venture capital investors for the next round of funding, or preparing to close an M&A transaction, startups require an investor data space to organize the information and ease the due diligence process. This solution helps to reduce communication time and speed up the process of making decisions throughout the course of a transaction.
What documents should be stored in an investor data room?
In an investor data room startup documents are typically kept, regardless of industry. These include term sheets, capitalization charts, and data regarding previous funding. The data room could contain technical documents such as integrations, system architecture, and existing product documentation. Additionally, startup’s investors will want to review intellectual property documents, such as patent numbers and trademarks, filings and any other private assets.
Before the start of raising funds entrepreneurs should think about the creation of a data room for investors. In this way, the startup will have its historical data stored in a single location and is able to easily present it to investors during due diligence, without the need to recreate the presentation from scratch. Additionally, the VDR will allow for an insightful analysis, such as audit trails and activity monitoring so the startup can see what documents are being watched and by whom.