What Is a Data Room for Business?

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A data room for business is a central repository that holds and shares sensitive data about an enterprise transaction. It is secured and only accessible to those with authorization. It also has advanced features to facilitate stakeholders to work together and ask questions. This helps keep the flow of deals going and helps prevent leaks of crucial information when conducting due diligence.

The first step to create a data room is identify all the documents that you need to include including financial statements, legal agreements, and intellectual property. Once you have a list, you can arrange them into folders and subfolders for easier navigation. For example, you might need to create a “Competitive Analysis” folder that displays your research and compares your product or service with competitors. It’s also important to include an “Customer References and Referrals” folder that demonstrates the positive feedback you’ve received from customers.

For startups the data room could be helpful in attracting capital and to navigate M&A processes. It’s a great way to communicate investor materials, such as your pitch deck, the term sheet, and the most recent funding round. This will allow potential investors to understand the value your company has created and will help speed up the process of raising funds.

Virtual data rooms from Firmex and Intralinks are two of the most popular. Both offer a variety security features, including watermarking, two-factor authentication and encryption. Firmex also has the ability to monitor usage, so you can see who is browsing which documents and when.