A startup can create an investor data room which is a place to store information online that it curates to help answer due diligence questions from investors or M&A investment bankers. The goal is to reduce the amount of time required by everyone involved and move an acquisition forward. There are many software options to assist in this process. They include the most popular solutions like Google Workspace or Dropbox, but also more specialized ones such as CapLinked or Contract Zen.
Some founders, VCs and entrepreneurs have suggested that data rooms impede the process because they allow investors to put off making a decision by deciding on the data they want to view. However, this isn’t always the case however a https://onlinevdr.com data space should be used sparingly.
Typically the VC or investor will request access to a data room at two specific stages. Stage 1 includes the information they require to write an investment memo or to present you with an term sheet. This can include areas of the data room such as financial models and the cap table. This could include more specific information like bios of top team members or securities-related documents.
Stage 2. Investors want to conduct more thorough due diligence on your company. This could involve analysing intellectual property and technological stacks, and providing more detailed financial information and a listing of all agreements. It is also possible to give a more detailed version of your pitch deck at this point.