Whether you’re in the process of raising Series A funds or trying to close a merger acquisition or investment deal, an investor data room is an essential tool for due diligence. It allows you to organize all documents in one place and let third-party users access the information in real-time without the need to send emails or request new copies.
While it’s tempting, if you can, to fill your investor data room with all the information you have Be careful not to overwhelm your potential investors. A large number of documents could make the due diligence process lengthy and stressful for both parties. A well-organized dataroom is crucial to ensure that investors have the ability to quickly and efficiently review your business’s financial health, operational strategy, and legal standing.
Investors should be able to see your startup’s past and future financial statements, along with the sources and reasoning of any assumptions and modeling. It is also possible to include a list of previous capitalization tables, financing agreements as well as other information. founders who have a convincing enough pitch to attract VC interested investors will usually upload a copy of their pitch deck in their data room, too.
Most importantly, your investor data room should have clearly defined headlines on each slide. It can be difficult for investors to navigate a long, technical slideshow if the titles are unclear or confusing. Avoid utilizing non-standard analyses in place of the standard ones (e.g., showing part of a Profit and Loss statement as opposed to a full one).