In the past, when you were trying to sell your business, prospective buyers would come to your office and look over hard copies of all of the documents that comprised your company. Due diligence used to be called “doing your due diligence.” Nowadays due diligence may require you to go through thousands of confidential documents. That process is more efficient — and less risky — when it is conducted online using a virtual data room.

A data room can be used for a variety of mission-critical activities, including M&A corporate financing, fundraising insolvency and joint ventures. It can also be used to submit bids on procurement deals. The speedy access to information and the ability to monitor who has viewed what cuts down the timeframes, decreases the risk and increases the likelihood of success in deals.

Startups can utilize the digital data room to stand out and speed the process of funding. It helps them avoid the burden of having to send and return documents to investors. This lets them present the most current and accurate data at any given time.

Having an investor data room created also indicates that you are a professional and it makes it easier for investors to trust your business. It could contain sections like the presentation deck for your business along with financial information, documentation related to people, and market research. Some entrepreneurs will include the section on customer references and referrals to show how well they’ve cultivated their customer base. It is also important to keep the data area updated throughout the fundraising process.