A data room is a digital platform that allows businesses to conduct due diligence, share documents and conduct Q&A rounds in a safe, controlled, malleable way. It is used by a variety of industries and is an essential tool in M&A transactions as well as fundraising, IPOs, joint ventures and legal processes. Data rooms are used to store large and confidential documents and share them with multiple parties.
The information you share in a data room will differ depending on the purpose of your data room, whether it’s to raise funds, grow your business, or give information to your customers. It will also depend on the overall story you’re promoting. However, there are general best practices that will help you create a compelling presentation of your data room.
Be careful not to divulge confidential information to people who shouldn’t know about it. This is among a founder’s “worst fears” and is a possibility when they’re not cautious. For instance, if you are seeking to raise a Series A round, don’t give your entire investor information room to investors who aren’t interested in investing. This could stymie the process and can sour momentum.
Make sure that your platform can be easily accessed and you should consider a data room provider that is PCI DSS compatible. This industry standard demands strong security, including secure access control and storage of data and encrypted communications. It also requires regular security tests. It is important to know who has viewed what. Document versioning is the simplest and most efficient method to accomplish this.