How Startups Can Use a Data Room to Share Documents With Investors

Most people think of data rooms as an instrument to complete due diligence in mergers and acquisitions (M&A) however, they can also be useful to raise capital. Startups can use a dataroom to share documentation with investors. This is especially true when they are close to the end of a fundraising campaign. A data room with the right features can speed up communications and improve investor confidence.

Typically data rooms have a dashboard that will provide a snapshot of recent activity and notifications. Users should be able to customize their preferred view of the dashboard, and also change their security and notification settings. When logging into the system, users will have to enter their email address, accept the Terms of Privacy and Use and modify their password security settings.

Users will be able to browse and download documents once they’ve signed in. A data room must have an index that allows users to easily find the document they’re searching for, and, most importantly it should be able to edit the document if needed. A data room should also be able to keep track of the number of people who have used specific documents.

A data room should include an area where questions can be posed and answered. The platform can categorize answers, questions and even identify specific phrases and words that need to be redacted using its proprietary artificial intelligence engine. The system will mark these portions of text with the red flag, and label them according to the future references.

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