A data room is a secure space used for storing and sharing information such as corporate documents and contracts. It can either be physical or virtual.
When you seek to close a string of investments, your goal will be to present the best picture of your company to potential investors. The aim is for them to see the value of investing in the business for potential profits. How you present the company, and specifically the documents, is vital since they paint a picture of its strengths and performance.
A data room comes in handy by providing a secure space for sharing such sensitive information between parties in the process of reviewing and investigating each other.
For an investor, the main objective of the data room is to present your business’s potential to another group of investors for future profit. Some of the documents that you should consider including are:
- Business plans.
- Tax returns and audits.
- Company’s financial statements.
- Company’s legal structure and articles of incorporation.
- Minutes of the board of directors.
- Records that show previous capital raises and liquidity.
- Records of employees, their contracts, and compensation.
- Information on products and services.
Other additional documents can be presented to investors at a later stage of the deal.
Some of the benefits of data rooms for investors include:
1. Data rooms allow you to personalize access rights. You can set a base structure that includes all documents and create different access rights for each record. You can tailor content for each person. For instance, the investor’s legal representative might only need to look at the contracts and legal structure documents and not sales documents.
2. Having a diligent data room will enable you to assemble and present all the essential documents quickly. Potential investors will not only be impressed, but it will also save time for both parties involved.
3. Another benefit of the data room is that your documents cannot be altered, shared, copied, or printed without your permission, thus ensuring security for your data.
4. The data room allows you to track access to your data. You can see who has accessed what documents, the time, and how long. Such a feature will enable you to take action when you notice any unusual activity. It also allows you to see documents that have not been accessed and recommend that the investors look at them.
5. Since the data room is tailored for ease of access, it is very convenient and enables you to make updates without starting from scratch.
6. A data room also includes short messaging or commenting, conveniently allowing the investor to review without leaving the site.
7. Data rooms also allow you to present your documents in a unique way that will captivate investors. Since they usually review hundreds of companies, this feature enables your company to stand out and be visible to your potential investor.
Conclusively, choosing an excellent data room provider is the key to all investors. It allows you to leverage on the mentioned benefits and more. Here is A Guide of Data Room Providers that will make your search a lot easier.
