Investor data rooms are a place that startups can store due diligence documents that can be utilized by potential investors or acquirers in a fundraising round. These are the documents that do not fit into a slide or slideshare, but potential financial backers must verify prior to investing in a company or sign the term sheet.
These documents are essential for investors because they can help them make quicker decisions and easier, which cuts down the amount of time that investment managers have to devote to the deal. They also feel like being part of the startup group. This helps build trust and leads to more accurate feedback.
The best investor data room also gives startups visibility on who has access to what information, ensuring sensitive documents do not get into the unintentional hands. Transparency allows startups to customize their interactions with investors and improve the results of any transaction.
A shared folder can function as an investor dataroom for angel investors or seed investors. However, purpose-built software is a better choice, particularly for Series A rounds and beyond. A high-end, professional-grade virtual dataroom is more affordable than consumer grade software, and also comes with advanced security features, powerful file search, as well as other features. Some even offer digital rights management (DRM), which encrypts files so that they are not able to be copied, edited or printed by anyone who is not part of the platform. CapLinked’s investor data room offers this feature as well as other.
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