Sharing your company data with investors the right way
Traction data, business strategy, among others, are highly valuable and confidential, especially for private companies for obvious reasons. However, one surprising pattern which has been around is less than 10% of the entrepreneurs I’ve met to date practiced any document protection measure while a lot more number had asked if they can use an NDA.
While there’s no such bulletproof protection and NDA is probably not an ideal solution for early-stage companies, here’s a reminder of a few simple but efficient practices how founders can better share sensitive documents to recipients whose credibility, from time to time, may be unknown.
1) Document sharing applications
Document sharing and Virtual Data Room (VDR) applications help document owners control and protect their archives and data, including
- keeping an audit log (so you know who’s viewing or downloaded the docs)
- allowing view-only instead of making copies
- generating watermarks according to the recipient’s identity
- setting expiration dates to the files you shared
There’s a number of service providers serving from less sophisticated startups to larger enterprises and the fees vary depending on the features you need.
Among the document sharing applications commonly used by startups are Digify and DocSend.
2) Watermarks and Footnotes
An approach which is still rarely practiced but highly beneficial to document owners is the use of watermarks and footnotes in the documents themselves. This does not help protect against sharing documents to unintended audience but at least it gives people some second thoughts on unauthorized sharing and use of the files.
Watermarks and footnotes can be easily created via a built-in function in most office applications, from document to spreadsheet and presentation files.
3) Password protection
At a glance password protection seems an old-school and ineffective measure but it actually helps to a certain extent, and is clearly better than letting anyone open your important documents with a double click. One suggestion is that document owners can use the recipient’s name as part of the password itself. For example, if you have to share some files to a company called ABC Capital, your password could be something like ’ABCCapitalMay2019’.
Most file formats you need to share, including pdf and office files, can be password protected and you can enforce restriction on opening, editing and printing of the files.
Bottom line
As an entrepreneur, you will find yourself often engaged with some people you don’t know much, whether it’s fundraising, partnership or just getting some advice. Sensible document protection does not only reduce unnecessary damages to your company but also show the recipients your diligence and that you know how to protect important data for both your company and your partners you work with. Impression is temporary but credibility lives on.
This post is a part of my Venture Fundraising Basics series where I will try to share the fundamentals of raising venture capital for entrepreneurs and some local perspectives from my experience in Southeast Asia. For the complete outline and links to other posts, please visit here.
Note: All contents and opinions expressed in this story are humbly of my own and do not represent those of any of my current or previous employers.
