Virtual Data Room is a unique digital solution that allows companies to store their sensitive data and share it with outsiders, confident in its integrity and security. VDR solves all the problems associated with the risk of storing and sharing data online, and you can even use it to conduct transactions remotely. But when companies decide to do marketing, they get confused: which documents should be included in the VDR? In this article, we’ll address that question.
What is a data room?
A virtual data room is a digital space in which a company can store sensitive data and make it available during due diligence. Due diligence is mandatory during many transactions, such as mergers, acquisitions, or fundraisers, which established companies and startups can conduct. During due diligence, a company must give access to its sensitive data to completely outside users, who must ensure that your records and operations are okay and that your cooperation makes sense to continue. During these moments, your data is more vulnerable than ever, but thanks to the Virtual Data Room, business leaders can have peace of mind about the integrity of their data. In addition, VDR offers powerful security tools that virtually 100% protect you from data breaches. It includes data encryption, dual authentication, watermarks, and explicit permissions.
What documents should I put into the VDR for due diligence?
When you’re putting together a package of documents, it’s important to stay in the golden mean. After all, if you add too few documents, experts will have little information to conclude. Still, if you add too many documents, much of which will not be necessary, the verification process will drag on, and your potential partners or investors will lose all enthusiasm. Below we will consider what documents should be added to the data room first:
- Documents about the organization of the company
The section with these documents should include information on the company’s registration, tax, and any other information that professionals need to convince that the company was created and operate on a legal basis. For example, this list may include the company and organization’s articles of incorporation, business certificates, and tax identification numbers.
- Financial information
This section should include previous transactions and fundraising information. Add legal files, term sheets, and capitalization tables to this document folder.
Business owners with more advanced technology can include a technical document or presentation to inform readers about market problems and how their product or service helps solve them.
- Predictive Financial Information
This section should include documents with the company’s projected financials.
- Employee data
This is where you should include each employee’s resume, title, salary, agreements, and hiring documents.
- Market information
Managers can also include documents indicating their market position: market size and growth trajectory, competition data, and industry regulations.
- Other information
Other data depends on the purpose for which the due diligence was conducted. For example, if you aim to raise funds, you can include demonstration videos, the so-called product development “journey,” and additional legal documents.
In addition, the virtual data room makes collecting and organizing your documents much easier. Its tools are flexible, which helps to create a solid document system, and it also automatizes a lot of routine processes. For example, it uses mass upload, auto-indexing, drag-and-drop, and smart search tools. With the help of the last feature, invited users will provide more efficient due diligence, as they will orient in the space much easier.