An investor data room (IDR) is a virtual repository that lets you share files with third parties or potential investors in fundraising and M&A deals. It lets startups organize their documents into a central location, rather than sending multiple emails with attachments. It allows startups to monitor access to third-party accounts and protect sensitive information from accidental leaks.
A few of the most important documents to be saved in an investor data space are company formation documents and legal paperwork and intellectual property documents (like trademarks or copyrights), employee agreements, non competitors, stock option plans and contracts with customers and partners. Startups can also add a pitch deck in their investor data room to show the potential of their business market research, competitor analysis, and a business model.
When conducting due diligence, savvy investors should review the complete list of company documents https://vdrprice.com/5-reasons-companies-need-a-good-document-management-system/ as well as an example set of financials to show how the business model functions. You can accelerate the process by making these documents available in a single format, such as an investor data room.
As a bonus an investor data room can be used to share periodic updates for investors throughout the year. This helps keep investors engaged with the business and shows that the team is focused on growing and is executing their strategy. A well-designed investor data room should also include short messaging and commenting capabilities for potential investors to ask questions without leaving the platform.