Traditionally, companies stored important documents in a safe room that possible buyers could access during due diligence. Today these documents are stored in the data room. Investors have access to information such as your articles of association patents, intellectual property and the legal structure of your business, including contracts, stock vesting, and the cap table (which breaks down who owns how much) before agreeing to invest in your company.
It’s important to have the correct documentation prepared in a timely manner when you’re planning an investor, a sale or an acquisition. This can speed the process and lowers the risk of missing an important item.
Virtual data rooms provide the security of sharing and storage of IP and licensing documents. Security features such as audit logs and user permissions settings, watermarking, and restrictions on printing/download help prevent information leakage and data breaches.
Lawyers often have to deal with large volumes confidential documents during a case. Virtual data rooms are the best for managing this material because of their secure encryption techniques and robust security controls. VDRs permit lawyers to work with clients and share documents while preserving confidentiality.
When you start making pitches to investors, a data room for investors must be created so that they have access to all the information necessary for due diligence. This will ensure they are aware of the product you’re selling, and will be able to make an informed decision on whether or not they’d like to collaborate with you.