Traditionally, companies kept important documents in a safe area that buyers could access for due diligence. Today these documents are stored in the data room. Investors can access information such as your articles of association and patents, intellectual property, and the legal structure of your business, including contracts as well as stock vesting and a cap table (which lists who owns what) before agreeing to invest in your company.
It’s important to have the correct documentation in a timely fashion when you’re planning an investor, a sale or an acquisition. This helps speed up the process and reduces the possibility of missing something important.
Virtual data rooms provide the security of sharing and storing documents related to IP and licensing. Security features such as audit logs and permission settings along with watermarking, printing and download restrictions stop leaks of information and data.
Lawyers are often faced with a large volume of confidential documents in a trial. Virtual data rooms are a great way to manage this material due to their secure encryption techniques, as well as their granular controls on security. VDRs permit lawyers to collaborate with clients and share files while maintaining the confidentiality.
A data room for investors must be set up when you begin making pitches to investors so that they have access to all of your pertinent information during due diligence. This will ensure that they understand what you’re selling and can make an informed decision as to whether or not they’d like to work with you.