If you’re in the midst of raising Series A funding or trying to conclude an merger, acquisition or investment deal, an investor data room is a crucial tool for due diligence. It helps streamline the collection of documents into one repository, and allows other parties to access information in real-time, without having to email you repeatedly or request copies of the latest version.
It’s tempting to do it, but you don’t want to overwhelm your investors. Too many 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 evaluate the performance of your business, its operations strategy, financial health and legal standing.
Investors will be interested in your company’s projected and historical financial statements. They’ll also want to know the origin of any assumptions or modeling and the reasons behind these. You can also include a list or past financing agreements, capitalization tables and other information. Entrepreneurs with a compelling pitch that attracts VC interest typically put a copy of their pitch in their data room.
Your investor data room should have clearly defined headlines for 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 analyses in place of standard ones (e.g. showing part of the Profit & loss statement vs. a full view).