A data room is a central storage of sensitive information regarding business transactions. It is secure and accessible only to those who have authorization. It also has advanced features that allow stakeholders and stakeholders to collaborate with each other, ask questions and communicate. This keeps the process moving along and stops leaks of critical information in the course of due diligence.

To set up a data room it is necessary to first identify all documents that should be included, including financial reports, legal agreements or intellectual property. After you’ve made the list of documents, you can arrange the documents into folders or subfolders to make navigation easier. For instance, you might need to create a “Competitive Analysis” folder that displays your research and analyzes your product or service with your competition. Include a “Customer References and Referrals” folder to display the positive reviews from your customers.

For startups, a data room can be beneficial in raising capital and to navigate M&A processes. It’s an easy method to share investor material, such as your pitch deck, terms sheet, and the most recent funding round. This can help potential investors understand the value your business has brought to the table and accelerate the process of fundraising.

Virtual data rooms from Firmex and Intralinks are among the most popular. Both offer a variety of security options including watermarking and two-factor authentication. Firmex also comes with the option of monitoring usage that lets you see who is browsing what documents and at what time.

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