A data room can be a valuable tool for startups raising capital to speed up the due-diligence process. It allows the buyers or investors of your company to review information and documents in a structured manner and increase your company’s perceived value and reducing the time required to conclude the transaction.
Whatever stage you are at the stage 1 or 2 your investors will require access to a variety of documents. It is crucial to determine which documents are essential and then gather, organize and label them appropriately. No investor or authorized party wants to spend their time sifting through a pile of papers.
Some of the most important documents include a business plan financial statements incorporation, intellectual property, ownership information, as well as pitch decks. It is also possible to include previous updates to investors, as they demonstrate that you are a transparent and honest business.
Be mindful about who you give access to. The use of a virtual room (VDR) with activity tracking will guarantee that you only grant access to people who need it and keep track of how long they are spending on each document.
Startups often do not realize that their intellectual property is valuable and should be included in an information room as well. This includes trademarks, patent filings and internal memos. This information can show that you are serious about your IP and strengthen your startup’s position during negotiations.