www.dataroomny.com/how-virtual-data-rooms-are-a-requisite-now-in-ma-transactions/
For startup founders due diligence is a crucial element in their process of raising capital. In contrast to sharing files via email an online data room lets founders be in total control of the information they share with investors. With Folderit entrepreneurs can ensure that their investors receive only the information they need to look at and nothing more.
The content of an investor data room for a startup will vary based on the business. However, most contain documents relevant to due diligence. A life science firm, for instance must include information about HIPAA compliance as well as clinical trial results. These documents are typically too large to be sent via email. A virtual data room is a better option to share these documents with investors.
Investors conduct due diligence to evaluate the likelihood of success of a new company and reduce their risk. The fact that they have all the information they require in one place accelerates the process and makes it easier for them to make a decision. It also shows that the founders value their investors’ time seriously which is a crucial consideration for most backers.
Due to investors’ limited budgets it is important that startups select a service with a flat-fee structure. Startups that are still fundraising can benefit from a model of per-page for text documents. This is less expensive than a subscription plan that provides unlimited storage and users. A free trial lets entrepreneurs to test the platform offered by their provider, practice reenacting their presentations with investors, and outline layouts for their documents.