A data room is a vital tool for conducting due diligence, regardless of whether you are raising Series A funds or closing an acquisition, merger, or investment deal. It simplifies the collection of documents into a single repository, and allows third parties to access information in real time without having to repeatedly email you or ask for updated copies.
While it’s tempting, if you can, to fill your investor data room with everything you have available but be mindful not to overwhelm your potential investors. Having too many documents can make the due diligence process lengthy and stressful for both parties. A well-organized, well-organized dataroom is necessary for ensuring that investors can quickly and efficiently examine your company’s financial health as well as operational strategies and legal status.
Investors will want to be able to see your startup’s past and future financial statements, as well as the basis and rationale of any assumptions and modeling. You may also choose to include an inventory of financial agreements, both past and present, and capitalization tables. Entrepreneurs who have a compelling enough pitch to draw VC interest often put a copy or a draft of their pitch deck in their data rooms as well.
Most importantly, your investor data space should include clearly defined headlines for each slide. If the titles of a technical slide presentation are unclear or confusing it could be difficult for investors to follow. Avoid using non-standard analytical techniques in place of the standard ones (e.g. showing just a portion of a Profit & Loss statement as opposed to a full one).