Creating a Data Room for Investors

If you’re in the midst of raising Series A funding or trying to close a merger acquisition or investment deal, a data room for investors is an essential tool to conduct due diligence. It lets you consolidate all documents in one place and allows third-party parties to access the information in real time without the need to email or request updated copies.

It’s tempting to do it, but you don’t want to burden your investors. A large number of documents can make due diligence a lengthy and frustrating process for both parties. A properly-organized data space is crucial to ensuring that investors can quickly and easily assess the company’s performance, operational strategy, financial health and legal standings.

Investors should be able to view your startup’s historical and projected financial statements, along with the source and reasoning behind any assumptions and models. You can also include the prior and current financing agreements and capitalization tables. Entrepreneurs with a compelling pitch that draws VC interest typically upload a copy in their data room.

Most importantly, your investor data space should have clearly defined headlines for each slide. If the titles of a technical slide show are unclear or confusing, it can be difficult for investors to understand. Avoid using non-standard analyses in place of standard ones (e.g. showing part of the Profit and Loss statement in contrast to. an entire view).

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