How to Create a Data Room for Investors and Due Diligence Teams

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A data room is an secure virtual space where companies can keep confidential information about high-risk business transactions. These include mergers, acquisitions, initial publicly-traded offerings (IPOs), and fundraising rounds. The data room permits authorized individuals, such as due-diligence and investors, to examine and assess sensitive files without sharing the original documents.

To make it easier for parties to view and understand your information, create clear folder structures and clearly label documents in the data room. This makes it easy for buyers to find the pertinent information they require to make an informed decision. It helps you keep your information in order and avoids errors.

Some startups divide their investor data rooms into various sets of documentation in accordance with the stage at which they are during the process. For instance in the case of starting to raise capital it may be necessary to withhold certain information until you’ve verified that an investor is interested in moving forward.

It’s tempting for you to provide as much information as possible. But, the information you share should be a part of your overall story. The story will differ based on the stage in which your company is, but it should always include key factors that are driving your current performance. For instance, a young company might concentrate on the latest market trends regulatory changes, market trends, and your team, whereas an expanding company may focus on customers’ references, revenue growth and product expansions.