A data room is a central place for sensitive data about business transactions. It is secured and accessible only by people with access authorization. It also has advanced features to make it easier for stakeholders to collaborate and to ask questions. This keeps the deal moving and helps prevent leaks of crucial information when doing due diligence.

The first step to create a data room is identify all the documents that you will need to include for example, financial statements, legal agreements and intellectual property. Once you’ve come up with an check this inventory of documents, you’ll need to organize the documents into folders or subfolders to make navigation easier. You can create a “Competitive Analyses” folder to showcase your research and to compare your product or service against your competitors. Include a “Customer Referrals and References” folder to display the positive feedback received from your customers.

A data room is a great tool for startups to raise capital and to navigate M&A processes. It’s a simple way to provide investor materials, such as your pitch deck, terms sheet and the most recent funding round. This will allow potential investors to understand the value your company has added and make it easier to raise funds.

Virtual data rooms offered by Firmex and Intralinks are two of the most popular. Both offer a wide range of security options including watermarking and two-factor authentication. Additionally, Firmex has a feature that lets you monitor the usage of the software to determine which users are looking at what types of documents and when.