A data room permits businesses to securely exchange sensitive data during business transactions and simplify complex procedures. A virtual environment which is well-organized could help you accelerate due diligence and decrease the risk of misuse of information whether you’re preparing to raise funds or close an acquisition.
Your data room should contain more than just the essentials such as a deck term sheet, and cap-table. It should also contain precise financial records and projections of revenue, IP ownership documentation, with other key information that will help investors understand the potential for growth of your business. These documents will boost confidence in investors, speed up due diligence and increase the likelihood of closing a deal.
Be sure that your data room is easily navigated by adding an index or table of contents with links to different sections. It is also important to label the folders and files with descriptive titles which are consistent so that those who access the room are able to comprehend them. Avoid sharing non-standard data (e.g. only displaying a portion of the Profit & Loss statement) as this can result in misinformation for potential investors.
It’s important to review and the content of your data room regularly. This will increase transparency and accountability while reducing the possibility of accidental disclosures. Additionally, a regular review will provide information about user activity in your data room (i.e., who accessed what information and when) which is useful for compliance purposes. Finally, consider adding watermarks on files you intend to share outside of your data room to reduce the possibility of file modification that is not authorized or theft.