A data room is a crucial tool to conduct due diligence, whether you’re raising Series A funds or closing an acquisition, merger or investment deal. It helps streamline the collection of documents into a single repository, and allows third parties to access the data in real-time, without having to keep sending emails or ask for updated copies.
It’s tempting to do it, but you don’t want to overwhelm your investors. A large number of documents could make the due diligence process long and exhausting for both sides. A well-organized dataroom is crucial for ensuring that investors can quickly and efficiently examine your business’s financial health as well as operational strategies and legal status.
Investors will want to be able to see your company’s historical and projected financial statements, including the basis and rationale behind any assumptions and models. You may also include an inventory of current and past financing agreements and capitalization tables. Entrepreneurs who have a compelling pitch that attracts VC interested investors often upload their own copy to their data room.
Your investor data room should include clearly defined headlines on each slide. If the titles of a technical slide display are unclear or inaccurate they can be difficult for investors to understand. Avoid using non-standard analytical methods instead of standard ones (e.g. showing part of the Profit dataroomnote.com/data-room-cost-and-its-relevance-with-service/ and Loss statement instead of. the full report).