A virtual data room (VDR) is an online secure repository that is used for sharing and storing private documents for high-risk business transactions. These deals can include mergers, acquisitions, and capital raising. They may also be used for divestitures, IPOs or any other kind of transaction that requires due diligence. Businesses in a variety of industries, including financial services, healthcare, and IT, use VDRs.

In the course of fundraising You will need to provide investors with the documents that support your overall narrative. The details of this story will differ depending on the stage your company is at however, it should be focused on driving an investment thesis that is able to move needles for your company.

For instance, an early stage startup may focus on market trends, regulatory shifts and your team. A growing-stage company might concentrate on relationships with key clients extension of products and new markets.

It’s crucial not to overdo the details after you’ve created the framework for your investor data room. This could impede the fundraise and lead to the fundraise not moving forward. To avoid this, you must use the framework described above, but be prepared to share any additional documents that are relevant to the investment argument your company is trying to make.

Although it may be tempting to use file-sharing apps for free such as Dropbox or Google Drive to store your investor data room, these platforms don’t provide the same auditing and security that a dedicated virtual data room reference does. This includes permission settings and watermarking and the ability to track the number of times a document is used.