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A data room is a space that allows sensitive information to be shared during due diligence and other business transactions. It is used in many industries such as finance, healthcare IT, and the capital markets to assist businesses share information securely with potential investors and other stakeholders. Due diligence was previously performed in physical rooms but nowadays, it is conducted digitally. It requires a large amount of documents.

Investors are often faced with a myriad of questions when they go through the documentation of a startup and it is the job of founders to answer those questions in a manner that is attractive to investors and speeds up the process. Begin by creating a folder structure that is clear and organized with clearly defined documents that are grouped into categories (e.g. legal, financial, contracts). Labelling these documents or folders clearly assists users and stakeholders to locate the data they require. Metadata can be added to the data room in order to give each file more context.

Other useful sections that founders can include in their data room include a competitive analysis, a list of current customers and referrals, as well as a customer references/testimonials section. Lastly, a company organisation/formation section includes any documents that show how the startup is legally registered and operated. This could include articles incorporating, business certificates, information regarding tax and an audited Financial Statement. This will show that the startup is a legitimate and legitimate business.