Over the past few years, the business world has been shaken considerably by a series of adverse events, chief among them the Covid-19 pandemic. Despite this, however, startups continue to fill the market actively. To begin with, young companies generate ideas, research the market, and develop strategic planning, but the toughest stage comes when fundraising time arrives. Of course, it would help if you attracted investors to promote your business without putting your sensitive data at risk. That’s why virtual data rooms are becoming popular for today’s startups. Find out what benefits VDRs can provide to investors.
The value of a virtual data room
A virtual data room is a cloud-based platform designed to store sensitive data of all types, perform due diligence and conclude complex transactions such as fundraising. VDR is used by companies from various industries worldwide as it satisfies several important requirements of modern business and allows processes such as mergers and acquisitions, IPOs, audits, and fundraisers to be conducted within its space. For the latter approach, it is important to keep your data secure and provide potential investors with a comfortable environment and easy access. Below we highlight five main benefits of VDRs for investors.
Not all potential investors are bona fide people. You cannot be sure that months of work on your business idea will remain intact if you submit it for review without any precautions. With a virtual data room, you can ensure that your data is secure. VDRs use advanced security features such as data encryption, dual authentication, and granular access permissions to do this. The first two ensure your security against external threats, while the latter allows you to control the access level of invited users within the space. You can prohibit copying, printing, forwarding, uploading, editing, and even screenshotting a document. VDR also offers watermarks that protect your copyrights. You can use them on intellectual property data.
Central data repository
Eliminate the awkwardness and repetitive forwarding of the document as you negotiate with your investors. A centralized repository makes it easy to upload and organize your folder system inside the VDR and invite investors. They can log into the space from any device and OS whenever they want.
With VDRs, your communication with investors will become more secure and efficient. The VDR space has an encrypted chat or question-and-answer section where you can talk securely about any topic. In addition, investors can leave notes and annotations on the document. Any change in the platform will not go through without your knowledge. The program will send you automatic notifications to answer questions as soon as possible.
One of the most important things about conducting fundraisers is transparency. Virtual data rooms allow you to establish a more trusting relationship with a potential investor. You provide them with more details without fear of data leakage. In turn, the program offers administrators detailed user activity reports within the documents.
Faster deals and more opportunities
Conduct transactions with investors more efficiently by inviting multiple potential investors into your space at once. Of course, there’s always a chance that investors will refuse to cooperate with you. To avoid wasting time, you can run multiple due diligence processes at once while keeping invited users unaware that they are not alone in the space. If an investor has not agreed to cooperate with you, you can ask them for a review that would help you improve your performance in front of other investors. Then, you can sign the contract right inside the VDR with an electronic signature.