If you are contemplating a private placement (PP) in the near future, it is crucial to share confidential documents with potential investors/partners. Virtual data rooms provide a more secure and organized alternative to spreadsheets or email to share information with multiple parties.
PPM Preparation: You are able to create a document library with custom permissions for each prospective investor or partner and monitor the usage metrics to gauge interest levels. Access expiration, dynamic watermarks, view and print permissions, as well as view-only permissions, help to prevent unauthorized access to sensitive files. Physical Security Your VDR should have facilities that are of a professional standard with multiple backups and offsite storage. Additionally, there should be fire protection, redundancy and biometric access. They should also implement granular access controls for forensic auditing as well as multi-factor authentication.
Inscribing capital into your own Company: You can upload confidential revenue projections and IP ownership documents to provide potential investors with an accurate view of your growth opportunities. You can also upload a cap table showing the division of equity between the founders and investors who are already in place. This can speed up the due diligence process and enable you to move more quicker towards a termsheet.
A virtual dataroom can also facilitate collaboration between internal teams and external partners, by allowing users to submit specific questions about documents in a separate section. The responsible person can answer questions as soon as they are able. This eliminates time wasted trying to find information in emails or sending files that could be lost.
