22 Oct How to Create a Data Room for Investors and Due Diligence Teams
A data room is a secure virtual space that allows businesses to store sensitive information regarding high-stakes transactions. These include mergers, acquisitions, first publicly-traded offerings (IPOs) and fundraising rounds. The data room allows individuals who are authorized, such as investors and due-diligence teams, to look over and evaluate sensitive files without sharing the original documents.
To make it easier for people to understand and view your data, design clear folder structures and clearly label the documents in the data room. This allows buyers to find the pertinent information they require to make an informed decision. It helps to keep your data organized and helps prevent any mistakes.
Some startups separate their investor data rooms into different sets of documentation depending on the stage they’re at within the process. For instance that if you’re only raising your first round of capital you might want to hold certain information until you’ve verified that an investor is interested in moving forward.
It’s tempting for you to provide all the information you can. But, the information you share should be a part of the overall narrative. The narrative you tell will vary based on the stage in which your business is at however, it should include the most important factors driving your current performance. A seed-stage company may focus on market trends and regulatory changes, as well as your team. However, a growth-stage business may emphasize customer references, revenue growth and product expansions.
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