A VC or investor has expressed an interest in your startup and has asked for more information. They want to verify the information you’ve shared in your pitch and are seeking granular information about your business model and financials. A data room for investors can aid.
The difference between the winners and losers of an investment deal can be made by getting it right. Investors are busy and don’t have the time to wait for slow processes, therefore you must be ready when an interested investor approaches. Making the proper information available in the virtual data room will help both parties save time and show that you’re committed to fundraising.
For a successful investment data room, you must begin by creating an organizational structure for your folders that is clear and clearly labeled. Include only those documents that investors need to conduct their due diligence. This will differ based on the stage of the deal, but typically includes:
IP Information (patent filings and trademarks)
People-Related Documentation (resumes, employee stock contracts and other documentation regarding hiring)
Financial Information (historical and projected), including assumptions, sources, and the reasoning that underlie these projections
Consider incorporating documentation to prove that your business is in compliance with local, national and international regulations. This is a great way to set investor’s minds at rest early and make them feel secure that the business how to run an investor data room is operating legally. Lastly, consider including files on long-term sustainability (e.g. carbon emissions reporting system or other measures for environmental sustainability). Utilizing a virtual data room which incorporates access analytics for files can allow startups to prepare for the possibility of meetings with investors and other stakeholders. This can lead to more productive conversations and an improved understanding of the concerns investors are most concerned about.