Traditionally, companies stored important documents in a secure location that buyers could access for due diligence. Nowadays these documents are stored in a data room. Investors have access to information such as your articles of association patents, intellectual property, and the legal structure of your company, including contracts, stock vesting, and the cap table (which shows who owns how much) before agreeing to invest in your business.
If you’re preparing for an investor, an exit or acquisition, it’s essential to have the right documentation prepared quickly. This speeds up the process and reduces the chance of missing an important item.
Virtual data rooms offer a secure environment for sharing and storing documents related to IP and licensing. Security features such as audit logs and user permissions settings, watermarking, and restrictions on printing/download can prevent leaks of information and data breaches.
Lawyers often deal with large volumes of confidential materials in a litigation. Virtual data rooms are the best way to manage this material because of their strong encryption methods and their precise security controls. VDRs also permit lawyers to share and collaborate on documents with clients while keeping confidential information.
A data room for investors should be loaded as soon as you start pitching to investors so that they have access to all the relevant information during due diligence. This will help them understand what you’re offering and make an informed choice on whether or not they’d like to work with you.