Initial stage startup investments require lots of paperwork, including financial models and cap tables, as well as investor agreements. A virtual investor data room provides a convenient way to share all of the information with interested investors, without giving away important company secrets or sending documents through multiple email threads.
A data room for investors could make due diligence more efficient. This will save time and money for all involved. Its automated document structure, search functionality and digital rights management make sure that confidential information doesn’t end up in the hands of the wrong people.
The appropriate software for the investor data room can make the difference when pitching to VCs, as well. Carta Launch, for example provides an investor data space with features such as a private and group messaging channel and task assignment, annotation, and commenting. This allows startups to present documents in the most attractive possible light and assists investors make informed decisions.
Some naysayers claim that an investor dataroom isn’t required for angel or seed investments, but it’s important to provide potential investors full access to your company’s documents. This will demonstrate to them that you are taking your business seriously and aren’t scared of putting out real documents. Investors will be grateful for having the opportunity to go through the documents prior to committing to your investment round. And a streamlined investment process benefits both parties, as it reduces the risk of an investment falling through or terms being altered to your detriment.