An investor data room is where startups store due diligence documents for investors who are interested in investing in a round of funding or for acquirers in an M&A transaction. These are the documents that are not able to fit into a slide or slideshare, but potential financial backers must check before committing capital to an organization or sign the term sheet.
Investors are eager to review these documents as they will aid them in making a decision faster and more easily and reduce the amount of time investment managers spend on the deal. They also let them feel like they are part of the startup team which increases confidence and gives more informed feedback.
The most effective investor data rooms also provide startups the ability to see who’s accessing which information, ensuring that sensitive documents don’t get into the in the wrong hands. Transparency allows startups to customize their interactions with investors, and improve the results of any transaction.
A shared folder can be used as an investor dataroom seed or angel investors. However, software designed specifically for investors is a better choice, especially for Series A rounds and above. A high-end virtual dataroom system is more cost-effective than consumer-grade software and includes advanced security features, a robust file search, as well as other features. Some even offer digital rights management (DRM) which encrypts files so that they are not able to be copied, edited, or printed by anyone who is not part of the platform. CapLinked’s Investor Data Room product offers this feature as well as other features.
http://vdrtechnology.info/is-it-safe-to-upload-sensitive-information-into-investor-data-room/