A data room is an online platform that allows various parties to view and access the same documents. It is commonly used to conduct due diligence in mergers and acquisitions, fundraising and corporate restructuring. There are a variety of cloud-based solutions which offer data room storage like Quoroom, iDeals, DataSend or Docsend for example It is essential to research prior to choosing one. Make sure the service you select offers templates, ways to organize files and sort them with ease, customized analytics, watermarking documents downloaded, and providing a secure cyberspace.
When establishing an investor data room, founders must think about what kinds of information investors are searching for. It is suggested to include the following sections.
Company Organization/ Formation Documents These include company bylaws and articles of incorporation. They also include business certificates as well as tax information and any other documents an investor may require to validate the legitimacy of a startup.
Financial Information In this section are historical and projected financials as well as the assumptions and sources used to create those projections. This section could also comprise a whitepaper or pitch deck.
Founders may also choose to include an “Other” section that contains any other information an investor more helpful hints may require, including intellectual property, technology stacks and additional documentation for the company. Investors will feel more confident when the data room is well-organized and complete. This can lead to quicker deals and better valuations.
