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What is the best option for a "Data Room" when raising $5-10mm in equity?

My company is preparing to raise capital and we've been coached that we'll need to have a Data Room setup. Apparently, as I understand it, a Data Room is an electronic repository where all of your company's documents are stored online. Then you give access to potential investors during their diligence process, so they can review your deck, pro forma, business plan, etc. in a secure location. I've read that it's helpful to have access to usage stats, so you can see which investors are looking at which documents, and for how long. I've also heard that these systems can vary widely in price and features. This is my first time raising this level of capital, so any insights from the community would be a huge help!

17 Replies

Daniel Lasher
4
0
Daniel Lasher Entrepreneur
Principal at The Cosine Group, LLC
If you're purely looking for a digital storage and sharing of documents you can use Dropbox or Box.com to manage this process which you might be able to do for free depending upon the amount / size of documents. The next step up designed for this type of transaction would be OneHub ( https://www.onehub.com) which is still relatively inexpensive ($30 to $100 per month) which provides additional security features. If you're expecting to have a lot of parties viewing the content and want to track usage and have high levels of security the next level would be Intralinks which can cost anywhere from a couple thousand dollars to much much higher levels depending upon the amount of documents you're uploading or any other services you'd need (ex: scanning). Happy to discuss further if it would be helpful.
Amy Kadomatsu
0
0
Amy Kadomatsu Entrepreneur
Co-Founder & President, ROKO Labs (I'm hiring!)
I wonder whether your legal counsel can do this for you. if not, then you could look at orgs like IngressCapital.com. They have a data room w/ restricted access and might be easier to deal w/? I know the CEO.
Vish Bhatia
0
0
Vish Bhatia Advisor
Co-Founder | President at Hotelsoft Inc.
I have used Intralinks in the past but that was for a much larger capital raise (>$500mn). It does make sense to use Data room for any fund raise that you are pitching to multiple investors. Intralinks could be expensive running into few thousand dollars a year. Some other virtual data room options are securefile and sharefile.com ... but I haven't used these.
Richard Liang
2
0
Richard Liang Entrepreneur
CEO, Founder at Preo
I've used datarooms in the past as an investor, and as someone raising capital.

Several options for you:
http://www.firmex.com/virtual-data-rooms/
http://www.securedocs.com/

If you want to be REALLY scrappy, you can use Docsend + Google Sheets + Dropbox as a way for you to provide links to all documents in one place (Google Sheets), have all views be tracked (Docsend), and all storage in one place (Dropbox).

For the investor, it's a way to have all diligence documents in one place (term sheet, model, customer data, analysis, etc). They will likely continue to make additional requests for raw data and analyses as the diligence process progresses.

For the entrepreneur, you want to be able to track who is viewing documents, when they viewed the docs, how often they view the docs, etc. It's helpful for you because it gives you a sense for what is important. For your key documents (model, financials, user behavior), you want to take a spin through your raw data first, so you can provide insight into the data before the investor just takes a blind stab at everything.

Hope this helps.
Rebecca Eisenberg
0
0
attorney, advisor, investor, advocate.
I have handled many financings of that size, both on the issuer (company) and investor side. I have had great success both with Google Drive and with Dropbox. Both offer invite-only access and allow you to track who has looked at and downloaded documents. Companies like Merrill will offer to sell you more expensive products, but overall I have found those systems far more difficult to use, and especially from the issuer side, you want to make the process as smooth as possible for investors. Google and Dropbox have excellent records of security in these matters and at least here in Silicon Valley, most VCs and angels are used to working with those systems. Best wishes, Rebecca Eisenberg Rebecca Eisenberg, Esq. Principal & Founder *Private Client Legal Services* www.linkedin.com/in/eisenberg [removed to protect privacy] [removed to protect privacy] PLEASE NOTE: The information in this e-mail message is confidential. It may also be attorney-client privileged and/or protected from disclosure as attorney work product. If you have received this e-mail message in error or are not the intended recipient, you are not authorized to use, copy, or disclose to anyone this message or any information contained in it. Please notify the sender by reply e-mail and delete the message. Thank you.
Andrew T. Madejczyk
0
0
Executive Technology Advisory
Having worked there and knowing the product, history etc, I would look at Intralinks.com
Gopi Mattel
0
0
Gopi Mattel Advisor
Director, Chennai Area at The Founder Institute
I am using DropBox as my Data-room and sharing it already with my counsel. I haven't had a need to figure out the ability to track views yet.
Lane Campbell
0
0
Lane Campbell Advisor
Lifelong Entrepreneur
Dropbox plus http://www.sookasa.com for security.

DropBox is not secure. Their engineers can see your data. If you care, don't put it on there, unless you use protection like Sookasa offers.
Ray Conley
0
0
Ray Conley Entrepreneur
CEO at CreekStone Capital Management & Managing Partner at FTL
We use Firmex and find it to be very effective. Sent from my iPhone
Edwin Miller
3
0
Edwin Miller Entrepreneur • Advisor
4x CEO | Founder/CEO at 9Lenses | Board Member | Author | Angel Investor
Data rooms are important. The cleaner the data room, the easier the due dilly process. Having been through three exits in the private and public markets and countless venture rounds, it has been my experience to always have the data room prepared as we are always sharing information. Having a way of tracking who, when, what, is important. Happy to share a view of what we do if you'd like.
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