What is an Investor Data Room?

Investor data rooms are areas that startups can store documents for due diligence that can be used by potential investors or acquirers during a financing round. These are the documents that do not fit into a slide or slideshare but which potential financial backers must check prior https://vdrtechnology.info/get-a-better-end-result-in-your-deals-by-following-these-rules to investing in a company or sign the term sheet.

Investors would like to look over these documents because they can help them make a decision quicker and with less effort and reduce the amount of time that investment managers are spending on the deal. They also make them feel as if they are part of the startup team which builds trust and results in more informed feedback.

The most effective investor data rooms also give startups the ability to see who’s accessing which information, making sure that sensitive documents aren’t into the improper hands. This transparency also enables startups to tailor their conversations with investors, which could help improve the outcome of a deal.

In a pinch the shared folder can be used as an investor data room for angel or seed investors, but specifically designed software is a much better alternative, particularly for Series A rounds and beyond. A cost-effective, professional-grade virtual data room solution offers more features than consumer grade tools, including advanced file search capabilities as well as advanced security structures. Some even offer digital right management (DRM) that is a feature that encrypts documents to ensure they aren’t able to be printed, copied, or edited by anyone else outside of the platform. CapLinked’s investor data room for instance, offers this feature as well as other.