Whether you’re in the process of raising Series A funding or trying to close a merger acquisition or investment deal, a data room for investors is a must-have tool for due diligence. It streamlines the collection of documents into a single repository, and allows other parties to access information in real-time without having to keep sending emails or request updated copies.
It’s tempting to do it, but you don’t want to overwhelm your investors. Too many documents can make the due diligence process lengthy and stressful for both parties. A well-organized data room is key in ensuring that investors can quickly and easily review the performance of your business, its financial health, operations strategy and legal standings.
Investors will be interested in your business’s projected and historical financial statements. They’ll also be interested in knowing the source of any assumptions or modeling and the reasons behind the assumptions or models. You can also include a list of past financing agreements, capitalization tables and other information. Entrepreneurs who have a compelling enough pitch to attract VC interest will often upload a copy of their pitch deck in their data room as well.
The most important thing is that your investor data space should have clearly defined headlines for each slide. If the titles of a technical slide display are unclear or inaccurate it may be difficult for investors to navigate. Avoid using non-standard analyses instead of standard ones (e.g. showing a portion of a profit and loss statement vs a full view).