Startups typically require a data room to share confidential information with advisors, investors and business partners during due diligence. They can upload growth reports, financial information, and intellectual property documentation to a data room that has been vetted and control who has access to the documents and when they are seen. This reduces the time required to complete due diligence and strengthens relationships with investors through the efficiency of sending out emails one-by-one.
Additionally, startups can utilize a data room to monitor the way investors interact with their information. Data rooms can provide activity reporting and automated analytics, revealing information about who has viewed what documents and for the length of time. This lets startups follow up with investors who have spent much time looking over data.
A well-designed startup data room is critical to establishing trust with investors and optimizing the results of investments. It is vital that the information you give to an investor is in line with your overall narrative. This virtual data room functions will vary by stage, but could include market trends, regulatory shifts, team strengths, and compelling “why now” forces for a seed-stage company and focusing on key accounts and relationships, new growth strategies and product development and more for growth stage companies. A data room that is well-organized and labeled clearly will help investors understand the information.