The answer is a Data Room, a secure location where a startup can store important documents for due diligence and manage who has access to the documents. A data room can be a specifically designed piece of software with access to granular permissions and linking expiring, or an ordinary Google Drive folder.
Investors are examining your company and want to learn more about your team, business model and traction, as well as your financials. An investor data room can help to make the process more efficient and assist you in close a deal quicker. What is an investor dataroom, and what should it contain?
In the past, if a company wanted to buy another company, it was required access to the historical and financial documents of the company. These documents were usually stored in a room and the people who were involved in deciding the company’s future would go to that room to review them. Investors are doing the same type of work today to determine whether they should invest in a company and require access to the same documents.
The most efficient investor data rooms are organized in a way that makes it simple for investors to understand and navigate the information. It is also important to ensure that the data you provide is pertinent and doesn’t contradict itself. A well-organized and organized data room ready to go when the first fundraising discussion will also help the process go more smoothly.
