A data room is an essential tool for conducting due diligence, whether you are raising Series A financing, or closing an acquisition, merger or investment deal. It lets you consolidate all documents into one location and allows third-party parties to access the information in real-time without the need to send email or ask for updated copies.
It’s tempting but you don’t want to overwhelm your investors. A large number of documents could make due diligence lengthy and frustrating for both parties. A well-organized dataroom is essential to ensure that investors are able to quickly and efficiently evaluate your company’s financial health along with operational strategy and legal standings.
Investors will be interested in your business’s projected and historical financial statements. They will also want to know the origin of any assumptions or models, as well as the reasoning behind them. You may also choose to include an overview of your recent and previous financing agreements and capitalization tables. Entrepreneurs with a compelling pitch that draws VC interested investors often upload a copy in their data room.
Your investor data room must include clearly defined headlines on each slide. If the titles of a technical slide show are unclear or misleading it could be difficult for investors to follow. Avoid using non-standard analysis instead of conventional ones (e.g. showing only a portion of the Profit & Loss statement in contrast to. the full report).