A data room is a space that allows sensitive data to be shared during due diligence and other business transactions. Data rooms are used in a variety of industries like healthcare, finance, and IT, to share sensitive information with potential investors. Previously due diligence was usually performed in a physical room, but now it is mostly conducted digitally and typically involves large volumes of documents.
Investors will ask many questions about the startup’s documentation. It is the responsibility of the founders to answer these questions in a way that makes them feel welcome and speeds up the process. Begin by creating a folder structure that is organized and clear with clearly defined documents that are grouped in categories (e.g. legal, financial, contracts). Labeling these documents and folders makes it easier for people to find the information they require. Metadata can be added to the data room to give each document additional context.
Other useful sections that founders can include in their data room include a competitive analysis, a list of current customers and referrals, as well as a customer references/testimonials section. Lastly, a company organisation/formation section includes any documents that show how the startup is legally registered and operated. This could include articles of incorporation as why not try these out well as business certificates, tax information and an audited financial statement. This can prove that the startup is a legitimate and credible entity for consideration by an investor.