An investor data room (IDR) is a virtual repository that allows you to share your files with third party or prospective investors during fundraising and M&A deals. It allows startups to organize their documents in a central place, instead of sending multiple emails with attachments. It allows startups to monitor access by third parties and protect sensitive data from leaks.

A few of the most important documents that are saved in an investor data room include documents for the formation of a company, legal documents and intellectual property documents (like trademarks or copyrights) agreements for employees, non competition agreements, stock option plans and contracts with partners and customers. Startups can also include a pitch decks in their investor data rooms to showcase their company’s potential, competitor analysis and market research.

Investors who are sophisticated would like to review the entire list of company documents and the financial statements that demonstrate the business model. Making these available in a consolidated format, like an investor data space, will speed up the process and allow you to close a deal more quickly.

A data room for investors can be a great way to share investor updates continuously throughout the year. This keeps investors engaged and shows the team’s focus on development and executing their plan. A well-designed data room for investors can include short message and commenting options for potential investors, so that they can post questions without leaving the platform.