A data room is a virtual space for the sharing of sensitive information during due diligence or other business transactions. Data rooms are used in many industries including finance, healthcare and IT for sharing sensitive information with potential investors. Prior to this due diligence was typically performed in a physical room, but nowadays, it is conducted digitally and typically involves large numbers of documents.

Investors will ask many questions about the startup’s documentation. It is the job of the founders to respond in a way that will impress them and speed up the process. Begin by creating an organization structure that is organized and clear with clearly defined documents grouped into categories (e.g. legal, financial, contracts). A clear labelling of these official site documents and folders helps stakeholders to locate the data they need. It can also be helpful to add metadata to the data room to give additional information about each file.

Other useful sections that founders can include in their data room include a competitive analysis, a list of current customers and referrals, as well as a customer references/testimonials section. Lastly, a company organisation/formation section includes any documents that show how the startup is legally registered and operated. This could include articles of incorporation or business certificates, as well as tax information, and an audited financial statement. This will show that the startup is a credible and legitimate entity.