Traditionally, companies kept important documents in a safe location that buyers could access for due diligence. These documents are now digitally stored in data rooms. Investors can access information such as your articles of association and patents, intellectual property, and the legal structure of your company, including contracts, stock vesting, and the cap table (which shows who owns what) prior to committing to invest in your company.
If you’re preparing for an exit, investor or acquisition, it’s crucial to have the right documentation completed in a timely manner. This will make the process easier and reduce the chance of omitting anything crucial.
Virtual data rooms offer an encrypted environment for sharing and storing information related to IP and licensing. Security features like audit logs, user permission settings, along with watermarking, printing and download restrictions stop data breaches and leaks.
Lawyers typically deal with large volumes of confidential materials in a lawsuit. Virtual data rooms are ideal to manage this information because of their secure encryption methods and extensive security controls. VDRs allow lawyers to work with clients and share documents while preserving the confidentiality.
A data room for investors should be set up when you begin selling to investors, so that they have access to all of the information you need to share during due diligence. This will enable them to comprehend what you are selling and make the right decision as to whether they’d like to partner up with you.