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An investor data room is a repository of information that startups curate to address due diligence queries from investors and M&A investment banks. The goal is to cut down the amount of time needed by everyone involved and move the transaction forward. There are a variety of software available for this task which includes the standard alternatives like Google Workspace and Dropbox, and more specialized options like CapLinked and Contract Zen.

Some founders, VCs and entrepreneurs have suggested that data rooms can slow the process because they allow investors to stall their decision by deciding on the data they want to view. This isn’t always the case, but data rooms should only be used sparingly.

Typically an VC or investor will request access the data room at two distinct points. Stage 1 involves the data needed to create an investment memo or to provide you with an term sheet. This could include sections of the data room such as product-market fit, financial models and a cap table. It could also include more detailed data such as the bios of your team’s top members and securities-related documents.

Investors will want to do a more detailed due diligence on your https://onlinevdr.com/benefits-of-due-diligence-data-room/ company at the second stage. This can include analyzing intellectual property and technology stacks, and providing more detailed financial information and a list of all agreements. You may also choose to provide a more detailed version of your pitch deck at this stage.