A data room is a secure storage space for documents that are privileged to facilitate business processes such as due diligence, mergers, and acquisition transactions. The use of data rooms is growing across industries as businesses seek to simplify the process of document exchange.

Virtual data rooms are utilized by life science companies for everything from the results of clinical trials and HIPAA to licensing IP, and storing patient files. They also use them to share audits with investors using secure platforms. In the case of startups that are small or early stage VDRs let them determine which investors spend time reviewing company documents so they can get a feel of how keen each investor is.

Virtual data rooms were initially created with M&A transactions in mind. They put a focus on security features such as document revisioning and real-time monitoring of documents. Nowadays, a variety of these solutions have expanded into new markets, using their technology to meet the needs of other what is a data room types of transactions, such as fundraising, IPOs, corporate finance joint ventures, insolvency licensing agreements, as well as sharing documents related to litigation.

To avoid this, ensure your data room contains clear, concise and high-integrity data that supports the larger narrative you’re presenting to investors (e.g. market trends regulatory shifts, your team). To avoid this, make sure that your data room contains clear, concise and high-integrity content that supports the narrative you’re articulating to investors. Avoid presenting data in fragments or unconventional analyses that could make investors confused. For instance, showing only a fraction of a Profit & Loss Statement, rather than the entire report is a mistake.