An investor data room is a virtual repository for sharing files with prospective investors and other third parties in fundraising and M&A transactions. Startups can organize their documents in a central space, rather than sending multiple emails with attachments. It helps startups monitor access to third-party accounts and protect sensitive data from leaks.
Some of the most important documents stored in an investor data room are documents for the formation of a company, legal documents and intellectual property documents (like trademarks or copyrights) agreements for employees, non competitors, stock options plans and agreements with partners and customers. Startups may also include their pitch decks in their investor data room to showcase the company’s potential, market research and competitor analysis, as well as the business model.
Investors who are sophisticated will want to view the complete set of company documents and a sample of financials which provide the business’s model. Making these available in a consolidated format, such as an investor data space, will speed up the process and help you close deals more quickly.
A data room for investors can be used as a bonus to provide updates to investors continuously throughout the year. This keeps investors interested and shows the team’s focus on development and executing their plan. A well-designed investor data room can include short messaging and commenting capabilities for potential investors to ask questions without having to leave the platform.