A data room is a repository where confidential documents can be saved and shared in a secure manner. These rooms are typically used in due diligence, M&A deals and other legal deals. A properly-organized data room can dramatically simplify the process, resulting in faster, more successful transactions.
Investors need to review all the pertinent information about your business before making a decision to invest. This information can vary based getting involved in a successful investment on stage, but might include the name of your team as well as changes in the market, regulatory changes and other compelling reasons to invest.
Make sure that you are using a secure platform that is accessible to investors. One of the biggest founder’s nightmares is a VC leaking your information to a competitor or portfolio company. This can be avoided by using a VDR that has encryption in both storage and in transit. You should also be able to define specific permissions for individual users, and revoke their access rights at any time during the development.
Make sure that your data room is structured logically and that each file is clearly identified. This will help investors save time and increase the probability that they will remain engaged with your file. Additionally, it is important to regularly update your file and remove files that no longer have value.
Don’t divulge information to investors as this could slow the process down and decrease the likelihood of success. The most efficient financing processes operate on momentum and the more difficult it is for an investor to locate the right information the less likely they’ll provide you with a term sheet.