A virtual data room (VDR) is an online secure repository for sharing and storing private documents for high-risk business transactions. These deals can include mergers, acquisitions capital raising, IPOs, divestiture or any other type of transaction where due diligence is required. VDRs are employed by companies across a range of industries, including healthcare, financial services, and IT.
In the course of fundraising, you will want to provide investors with documents that back up your larger narrative. The story you tell will vary in line with where your company is in its lifecycle, however, it should be centered on creating an investment thesis that will help your company.
A start-up in its early stages may be focused on regulatory changes, market trends and your team. A business in the growth stage could focus on key clients and relationships extension of products and new markets.
It’s important to not overdo the details once you’ve created the framework for your investor information room. This can slow down the fundraise and lead to the fundraise not moving forward. To avoid this, you should follow the framework above, but be open to sharing any information that is pertinent to the investment proposition your company is trying make.
While it might be tempting to use free tools such as Dropbox or Google Drive for your investor data room storage However, these platforms don’t provide the same security and auditing capabilities as a dedicated virtual room. This includes watermarking, permissions and the ability to keep track of who has access to the document.