Data room technologies are typically associated with M&A, due diligence and initial public offerings. However, they offer huge potential for startups as well.

A startup dataroom allows a company to share important documents with investors. This speeds up due diligence process and builds confidence in investors. It can also save time by reducing the need for meetings.

Many founders make the error mergers and acquisitions of putting off the creation of the startup data room until they are actively seeking funding. But, it’s usually better to establish one sooner rather than later. There are a variety of reasons to consider this, for instance that it aids in organizing important investor documents such as the introduction pitch and financial model.

Investors will want these materials to be viewed prior to when they decide to invest in the company. This will help them determine whether the company is an appropriate fit for their portfolio, and also give them a better understanding of the type of business they are considering investing in.

Included in a startup’s data room are other documents that are important to the startup, such as IP ownership documents and detailed financial records. The LOIs could also be included. These documents are useful for demonstrating to the investor that there already is interest in the product that the startup is preparing to negotiate commercial agreements with partners, and that any additional capital will help the business grow further.

It is beneficial to include the organization chart in the startup data room. This will let investors quickly evaluate the team and understand who is responsible for various aspects of the business.