What is an Investor Data Room?

An investor data room is a place where startups store due diligence documents to be used by potential investors in a round of funding or for acquirers in an M&A transaction. These are the documents that do not fit into a presentation or slideshare, but which potential financial backers must check prior to investing in the company or sign an agreement.

Investors would like to look over these documents as they will help them make a decision quicker and more efficiently, reducing the time that investment managers are spending on the deal. They also allow them to feel like they’re part of the startup team, which can build trust and results in more informed feedback.

The best investor data room provides startups with a clear view of who has access to what information to ensure that sensitive information does not get into the improper hands. This transparency also allows startups to customize their interactions with investors, which could increase the success of http://vdrtechnology.info/get-a-better-end-result-in-your-deals-by-following-these-rules/ a transaction.

In a pinch an unshared folder could serve as an investor information space for angel or seed investors, but purpose built software is a superior alternative, particularly for Series A rounds and beyond. A cost-effective, professional-grade virtual data room software solution comes with more features than consumer grade tools which include powerful search capabilities for files and advanced security structures. Some even offer digital right management (DRM) that is a feature that encrypts documents so they can’t be printed, edited or copied by anyone outside of the platform. CapLinked’s Investor Data Room product, for instance, offers this feature, as well as others.

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