A data room is a safe platform that allows multiple parties to access and look at the same documents. It is used for due diligence in mergers acquisitions, fundraising, and corporate restructuring. There are many cloud services that provide storage for data read rooms like Quoroom, iDeals, DataSend or Docsend for instance, and it is important to conduct your research prior to selecting one. Choose a provider that offers templates, ways to organize files and sort them with ease, customized analytics, and the ability to watermark downloaded documents as well as providing a secure cyberspace.
When creating an investor information room the founders must think about the types of information that investors would like to know. It is generally recommended to include the following sections:
Documents for the Company’s Organization/Formation: This includes company bylaws articles of incorporation, business certificates Tax information, as well as any other documents an investor may require to validate the legitimacy of a startup.
Financial Information: Included are the projected and historical financials as well as the assumptions and sources used to build those projections. This section could also include a whitepaper or pitch deck.
Founders can include an “Other”, which contains any other information investors might require, such as intellectual property stacks, technology stacks, and more documentation about the company. Investors will feel more secure that the data space is well-organized, complete and organized. This could result in faster deals and higher valuations.
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