How Do You Build a Data Room for Due Diligence?

You’ve had a wonderful meeting with an investor, and they’re looking to conduct additional due diligence. You’ve probably been told that this is a common practice and that a properly created data room can accelerate the process of fundraising.

You’ll need to provide a secure online space where people can access confidential documents. The documents can be accessed from any location and downloaded, including mobile devices. The aim is to facilitate a quick transparent and secure examination of crucial due diligence documents for potential investors. You can also monitor activity within your VDR, such as who is looking at which files and for how long.

The most important thing is to organize your data room in a way that accommodates different needs and requirements. For example, you’ll want to include the bare minimum of information required for stage 1 due diligence (e.g., product-market fit financial model, cap table). You’ll require more specific information for stage 2 due diligence. This includes documents for the company, securities-related documents, material agreements and staff bios.

You will need to decide whether you want to allow access to your dataroom to regular users, administrators, or guests. It is also important to determine whether you need a version control, which permits you to keep track of changes made to a document and ensure that your team members are working with the most current version of a file. Also, you’ll need select a vendor that provides the option of a virtual data room that meets your specific business requirements. Find a vendor with auditing capabilities, for example when your company needs to know who is viewing which files and how long.

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