A data room is a secure storage space for documents and files that have high value to your company. They include legalities, information about customers physical assets, intellectual property, and other corporate documents. They are used for a diverse range of purposes but most commonly in the context of due diligence processes associated with business transactions.
Data rooms can be a valuable tool to create the story of your company and aid your business in gaining investor interest. The narrative will differ depending on stage and could include developments in the market, regulatory changes and your team as along with growth drivers such as relationships and key accounts as well as monetization opportunities and expansion of products. The information you choose to include should support these themes, and be presented to investors in a way they are able to digest.
A data room can be a useful tool in the due diligence process but you must be careful not to use it excessively. The time spent in a data room can delay deal-making while external parties review large amounts of documentation and questions are asked repeatedly. Often it is necessary to conduct a preparation data room prior to inviting third parties in order to get everything prepared and uploaded in advance of the due diligence process. This can make a huge difference in how quickly the due diligence process is completed. This can reduce the chance of a deal going under by avoiding any surprises for third parties.