A data room is a repository that allows sharing of sensitive information with other parties. Due diligence is a common part of business transactions, such as M&A and fundraising. The purpose of the virtual data room is to allow users access to confidential documents in a secure and comfortable environment.
There are a variety of ways to find create a data room that can be created, including free tools such as Dropbox or Google Drive or paid services. Particularly, dedicated data room software offers more features than typical tools for sharing files, such as permission settings, auditing capabilities and watermarking, which can make a big difference in the professionalism when communicating confidential business information.
Life sciences companies also use investor data rooms for everything from clinical trials to HIPAA records licensing intellectual property and the storage of patient files. They’re a great tool to assess the interest of potential buyers or investors while ensuring all information is presented in a visually appealing manner.
A data room can aid the company in determining if there is any issues that could delay or even derail the deal. For instance, it’s beneficial to know if an investor is asking for a large amount of data from multiple sources, or when they are focusing on specific metrics such as retention or engagement that could be an indication that they haven’t been able to commit to investing in the company.