If you’re in the midst of raising Series A funds or trying to close a merger acquisition or investment deal, an investor data room is a crucial tool to conduct due diligence. It helps streamline the collection of documents into a single repository, and allows other parties to access information in real time without needing to repeatedly email you or ask for updated copies.
While it’s tempting to cram your investor data room with everything you’ve got at hand but be mindful not to overwhelm potential investors. Too many documents can make due diligence a long and difficult process for both parties. A properly-organized data space is crucial in ensuring that investors can quickly and efficiently review the company’s performance, operations strategy, financial health and legal status.
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 models and the reasons behind the assumptions or models. It is also possible to include a list of past capitalization tables, financing agreements and other information. Entrepreneurs who have a compelling pitch that attracts VC interest often put a copy of their pitch in their data room.
Most importantly, your investor data room should include clearly defined headlines for each slide. If the titles of a technical presentation are unclear or confusing, it can be difficult for investors to understand. Avoid using non-standard analyses instead of the standard ones (e.g. showing a small portion of the Profit & loss statement instead of. a full view).