Traditionally, companies stored important documents in a safe room that buyers could access during due diligence. These documents are now digitally stored in data rooms. Investors can view information like your articles of association, your patents, your intellectual property as well as the legal structure of your business. This includes stock vesting, contracts and the cap-table (which shows who is who).
If you’re in the process of preparing for an investor, an exit or acquisition, it’s crucial to have the proper documentation prepared in a timely manner. This will speed up the process, and reduce the risk of omitting anything crucial.
Virtual data rooms offer a secure environment for sharing and storing files related to IP and licensing. Security features like audit logs and user permission settings as well as watermarking and restrictions on printing/downloads prevent data leaks and data breaches.
Lawyers are often confronted with large volumes of confidential information in the course of a case. Virtual data rooms are ideal to manage this information because of their secure encryption methods and extensive security controls. VDRs also allow lawyers to share and collaborate on files with clients, while maintaining the confidentiality of sensitive information.
An investor data room should be set up as soon as you start making pitches to investors so that they can see all of the information you need to share during due diligence. This will ensure that they understand what you’re selling and make an informed decision on whether or not they want to work with you.