https://vdrprice.com/5-reasons-companies-need-a-good-document-management-system/

An investor data room is a virtual repository for startups to store documents that investors may access during due diligence. It allows them to streamline their process, increase transparency, and also ensure accountability.

Investors undergo a lengthy and extensive due diligence process. In having all the data in one place simplifies the process and accelerates the timeline for fundraising. Investors want to see private revenue projections, complete documents of financial transactions, as well as documentation regarding IP ownership. Investors want to know how the company has performed to date so that they can evaluate the cost of capital and its financing requirements.

Startups upload all these documents to the data room which is accessible to users with granular permissions. The system also automatically creates organized document trees for easy navigation and accelerates search results. It can even restrict access to the information in accordance with IP address and time protecting sensitive information from unintentional leaks.

The data room permits entrepreneurs and investors to exchange comments and monitor changes in real time increasing transparency and accountability. It supports a variety of file formats, and provides granular visibility into user activity including dates they accesses data. Startups can also use the platform for investor updates throughout the year to keep their investors updated on the their progress, milestones and new opportunities. They can also track who has viewed which documents and when. This adds an extra layer of security.