Traditionally, businesses kept important documents in a safe area that potential buyers could access during due diligence. Nowadays these documents are stored in a data room. Investors can access information like your articles of association and patents, intellectual property and the legal structure of your business, including contracts, stock vesting, and the cap table (which breaks down who owns what) before agreeing to invest in your business.
If you’re in the process of preparing for an exit, investor or acquisition, it’s crucial to have the appropriate documentation prepared in a timely manner. This will make the process easier and reduce the chance of omitting any important information.
Virtual data rooms provide the security of sharing and storing documents relating to IP and licensing. Security features such as audit logs as well as user permission settings watermarking, as well as restrictions on printing and downloads aid in preventing leaks of information and data breaches.
Lawyers are often confronted with large volumes confidential documents during a case. Virtual data rooms are the most efficient method of handling this material due to their robust encryption methods and their precise security controls. VDRs also allow lawyers to share and collaborate on files with clients while maintaining the confidentiality of sensitive information.
A data room for investors should be created at the time you begin pitching investors to ensure they can view all of your pertinent information during due diligence. This will ensure that they know what you’re selling and can make an informed decision on whether or not they want to work with you.