data room · Investors

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

Beau D'Arcy Engineer, Manager, and now Entrepreneur

March 13th, 2015

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!

Daniel Lasher Principal at The Cosine Group, LLC

March 13th, 2015

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.

Edwin Miller 4x CEO | Founder/CEO at 9Lenses | Board Member | Author | Angel Investor

March 13th, 2015

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. 

Richard Liang CEO, Founder at Preo

March 13th, 2015

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. 

Stewart Craine VIA Managing Director, Barefoot Power Co-Founder

March 14th, 2015

I've raised $10 mill to date, and was shocked when a capital advisory firm we used in the last $4-6 mill round (first time we used a partner) did not even have any document sharing facility that all 3 parties could see easily. They used Salesforce usually, but as we did not, we could not see anything, so we eliminated that as a possibility immediately. I had to explain to them what Dropbox was, so we used that, but file-sharing (and some tracking of downloads) is only one part of the equation. We used Google Sites instead recently, so we could put the docs on Drive as a document library, but also add on the most important next feature, which is not tracking activity, but posting FAQ answers. The most inefficient part of the capital-raising process is answering the same question more than once. Most investors I have worked with so far (over 100) have not objected to an answer I give them being shared with other potential investors via an FAQ page. If they want a private answer, you can always email it to them, or have a phone call.

I went to Sydney CBD to compare our home-grown data room with some top end dataroom suppliers like www.Ansarada.com because we'd both been recognized by similar business awards, and found our features were similar to theirs, but ours lacked a chat area where conversations are recorded securely. You could use any chat program for something similar, but it would not be referrable from the Data Room itself, which is handy but not as necessary as having an FAQ section. It's great here to see some more affordable options than Ansarada, and I'm starting a raise soon so will investigate them, but I think this is an area where Gust from the angel community has a great starting point, but could add on a dataroom to help deals got done faster, and most importantly in my mind, reduce the screamingly inefficient process of answering the same questions all the time. Entrepreneur time is just as valuable as investors' time, but is rarely treated so. Would be awesome to see a great product for this - I recommend using one, if only to reduce inbox clutter and provide structure to the due diligence process and your docs.

Joanan Hernandez CEO & Founder at Mollejuo

March 16th, 2015

Hello Beau,

Thanks for this thread! I didn't know Data Rooms even existed! :-P That said, We use box as our sharing platform. It's a solid solution and they offer Data Room functionality, I think it might be cheaper/straight forward since Box business is storing and sharing documents in the cloud.

Here you can compare the price of some Data Room services.

Cheers!


Beau D'Arcy Engineer, Manager, and now Entrepreneur

March 17th, 2015

Thank you everybody! I really appreciate all of the great insights. We're working on our assessment of each option and will be sure to report back with our findings and ultimately our decision. More to come...

Rebecca Eisenberg attorney, advisor, investor, advocate.

March 13th, 2015

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 rebecca@privateclientlegal.com 415-235-8078 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.

Amy Kadomatsu Co-Founder & President, ROKO Labs (I'm hiring!)

March 13th, 2015

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.

Ray Conley CEO at CreekStone Capital Management & Managing Partner at FTL

March 13th, 2015

We use Firmex and find it to be very effective. Sent from my iPhone

George Lambert Interim CTO - CTO's for Hire

March 15th, 2015

Have you heard of BrainLoop? 

They should be worth a look.  You can give people access to documents on a need to know basis with different access rights to the documents. 

https://www.brainloop.com/en.html