5 Best Security Practices for Your Startup Data Room

credit @golimitless

Data rooms can be a great tool for startups during fundraising, but keeping them secure should be a top priority.

A data room is a secure online storage space that contains all the information about you and your startup, typically organized and presented in an easy-to-use format. Data rooms are created for easier communication and collaboration between investors and entrepreneurs during the fundraising process. Sharing your data room should not be done so lightly. You’re sharing information that is at the heart of your business — everything you’ve built will be on display in these documents. Reread that last sentence.

There are many ways to ensure that you’re information is secure.

Pick a central secure folder or filesharing system.

The common ones you can use are Dropbox or Google Drive, both of which cost nothing and great tools. We were fundraising, went with Docsend, which provides another level of analytics, security, and management specific to the fundraising process.

Use secure links that only specific emails can access

This will ensure only the people you’ve personally communicated with have access. Keep track of who your data room is shared with and update it weekly to not leave uninterested people with access.

Set expiration dates on links

5 days to a week should be more than enough time but 5 minutes or hours is obviously not enough. This is a good way to gauge interest too. You’re setting some urgency in your deal and allowing a certain window of opportunity.

Restrict files from being downloaded

This is a great feature in Docsend, but there may be other tools that allow this. No one needs their own copy of your company’s information. If they are not open to using a link to view your data room, say “thank you” and move on.

Never give access forever

It’s simply not a good idea to let someone mozy their way to your data room whenever they feel like it. Consider where you are in the process. Do you have another meeting set up?

Lastly, remember that every step you take is with security in mind. I never met an investor who was upset, frustrated or blew us off because of the security features we put in place.



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