In the process of raising Series A financing or trying to close a merger, acquisition or investment deal, a data room for investors is a vital tool to conduct due diligence. It lets you organize all documents in one place and allows third-party parties to access the data in real-time, without having to email or request updated copies.
While it’s tempting, if you can, to fill your investor data room with everything you have, be careful not to overwhelm potential investors. Too many documents can create due diligence a lengthy and tedious process for both parties. A well-organized data room is essential to ensure that investors can quickly and easily evaluate the company’s performance, operations strategy, financial health and legal standing.
Investors should be able view the historical and projected financial statements, along with the sources and reasoning behind any assumptions and models. You can also include a list or past capitalization tables, financing agreements and other data. Founders who have a strong enough pitch to draw VC attention will typically upload a copy of the pitch deck in their data room as well.
Your investor data room must include clearly defined headlines on each slide. If the titles of a technical slide presentation are unclear or inaccurate it could be difficult for investors to understand. Avoid using non-standard analysis in place of standard ones (e.g. showing only a portion of a Profit & Loss statement instead of a complete one).
