A data room is a digital platform that allows startups to upload important documents to ensure due diligence prior to a funding round, or an M&A deal. This usually includes the company’s financial projections as well as extensive IP ownership documents. This information is made available to potential investors, who can use it to make informed decisions when investing in a startup.
When creating an investor data room, founders can choose to include the following information:
Pitch Decks or a Whitepaper: Founders may upload their pitch decks and whitepapers that describe how their product or service solves complex problems/markets in a clear and profitable manner. Adding this document will help build trust and demonstrate the company’s accountability to investors.
Projections: Founders should include both historical and projected financial statements, including the assumptions, sources and reasoning behind the projections. This will streamline the due diligence process and help investors comprehend the company’s projected financial performance and growth potential.
People-Related documents: Founders can include resumes of key team players and any employee stock agreement or other documentation related hiring. Founders can also include their go-to-market and growth strategy.
Investor Updates: Through the fundraising and due diligence process, founders are able to include a series updates to the VDR. This keeps investors informed about the developments of the business and lets them know that the company is dedicated to making the best use of their money.