Whether you’re in the process of raising Series A funding or trying to conclude an merger, acquisition or investment deal, a data room for investors is a crucial tool for due diligence. It simplifies the process of collecting documents into one repository, and allows third parties to access the data in real time without having to keep sending emails or ask for updated copies.
While it’s tempting to fill up your investor data room with all the information you have available, be careful not to overwhelm your potential investors. Too many documents can make due diligence a lengthy and tedious process for both parties. A well-organized and organized dataroom is vital to ensure that investors are able to quickly and efficiently evaluate the financial health of your business as well as operational strategies and legal status.
Investors will be interested in your startup’s future and historical financial statements. They’ll also want to know the source of any assumptions or models, as well as the rationale behind the assumptions or models. It is also possible to include a list of your previous capitalization tables, financing agreements and other details. Entrepreneurs who have a compelling enough pitch to attract VC interested investors will usually put a copy or a draft of their pitch deck to their data room as well.
Your investor data room needs to have clearly defined headlines on every slide. If the titles of a technical slide show are unclear or confusing it may be difficult for investors to navigate. Avoid using non-standard analytical methods instead of conventional ones (e.g. showing a portion of the Profit & loss statement vs. a full view).
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