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How to Set Up a Data Room for Investors

A data room provides an organized environment for document storage, management and sharing. Cloud solutions are offered by major providers like Quoroom, iDeals and Docsend through to niche providers that are tailored to specific industries or needs of business. A good provider will offer templates, ways to organize and sort files more easily, multi-user access through tools for communication and permission settings as well as custom analytics, data tracking, watermarking downloaded documents and many more. The right software can help you reduce risk and expenses, reduce time and money as well as improve the transparency of your internal processes.

During major events such as mergers and acquisitions or tenders or capital raises, there are typically large amounts of data that have to be analyzed. These documents could contain sensitive data that, when exposed, could cause harm to the company. A secure virtual or physical data room permits interested parties to review the data without divulging confidential information or potentially putting the deal at risk.

It is crucial to remember that each business is unique and, therefore, will require different documentation. However, there are some commonly used documents that are crucial for most companies. Included in this list are your Confidential Information Memorandum (a description of who is the owner of what percentage of your business) as well as your cap table milestones, important customer contracts. These documents can help give investors a complete picture of the company and help speed the process of raising funds.

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