Investor data rooms are a place where startups can keep documents for due diligence that can be utilized by potential investors or acquirers in a fundraising round. These are all the documents that don’t fit into the format of a pitch deck or slideshare presentation. These are the documents that prospective financial backers must check before investing or sign off on the term sheet.
These documents are important to investors since they aid them make decisions faster and easier, which reduces the amount of time investment managers need to spend on the deal. They also allow investors to feel as if they are part of the startup’s team which increases trust and provides more informed feedback.
The most effective investor data rooms give startups the ability to see who’s accessing which information, ensuring that confidential documents don’t end up http://vdrtechnology.info/is-it-safe-to-upload-sensitive-information-into-investor-data-room/ in the improper hands. Transparency lets startups tailor their conversations with investors, and improve the outcomes of any transaction.
In the event of a crisis, a shared folder could serve as an investor data room for angel or seed investors, however, purpose-built software is a better alternative, particularly for Series A rounds and beyond. A cost-effective, professional grade virtual data room solution has more features than consumer-grade tools, including powerful search capabilities for files and advanced security structures. Some even provide digital rights management (DRM) which encrypts files, ensuring that they cannot be edited, copied, or printed by anyone outside the platform. CapLinked’s investor data room for instance, offers this feature, among others.