A VC or an investor has expressed interest in your startup and requested more data. They want to verify the information you’ve shared in your pitch and want more detailed details on your business’s structure and financials. A data room for investors could aid.
The difference between the winners and losers of an investment deal can be made by making sure you do it right. Investors are busy people and don’t have the time for long processes. You need to be prepared when an investor is approached. The right information in the form of a virtual data room can save both sides time, and also show that you’re serious about fundraising.
To create a successful investor data room, you should start by creating an organizational structure for your folders that is clear and logically labeled. Only include the documents that investors will require to complete their due diligence. This will differ depending on the stage of the deal flow but generally includes:
IP Information (patent filings and trademarks)
People-Related Documentation (resumes, employee stock agreements and documentation on hiring)
Financial Information (historical and projected) which includes sources and assumptions, as well the reasoning behind these projections
It is also worth adding documentation to show that your business is in compliance with national, local or international regulations. This is an what is due diligence excellent way to put investors‘ minds at ease in the beginning and help them feel secure that the business is operating legally. Also, think about including documents on sustainability for the long-term (e.g. carbon emissions reporting system or other measures for environmental sustainability). A virtual data room that includes analytics on file access can aid startups in preparing for meetings with investors. This will lead to stronger conversations and a better comprehension of the questions investors are most concerned about.