A data room is a virtual space to share sensitive information during due diligence or other business transactions. It is utilized in a variety of industries, including finance, healthcare, IT and the capital markets to assist businesses share their information in a secure manner with potential investors and other stakeholders. Due diligence was traditionally performed in physical rooms but now, it is mostly conducted electronically. It involves large numbers documents.

Investors may have a variety of questions when they read the documentation of a startup and it’s the job of the founders to respond to those questions in a manner that impresses investors and speeds up the process. The best place to begin is to create a clear and organized folder structure, with clearly defined documents organized into categories (e.g. legal, financial, contracts). Labeling these www.gooddataroom.com/what-is-a-virtual-data-room-used-for/ folders and documents makes it easier for those involved to locate the information they need. It is also beneficial to add metadata to the data room to give additional information to each file.

Other useful sections that founders can include in their data room include a competitive analysis, a list of current customers and referrals, as well as a customer references/testimonials section. Lastly, a company organisation/formation section includes any documents that show how the startup is legally registered and operated. This could include articles of incorporation or business certificates, as well as tax information, and an audited financial statement. This will show that the startup is a reliable and legitimate entity.