A data room is a secure virtual space where companies can keep confidential information about high-stakes business transactions. This includes mergers and acquisitions as well as initial public offerings (IPO) and fundraising rounds. The data room allows authorized individuals, including due-diligence and investors, to examine and review sensitive files without sharing the original documents.
Create a clear structure for your folders within your data room and clearly label all documents to make it easier for others to understand and read your information. This will help prospective investors and buyers to locate the information they require to make informed decisions. It helps you keep your information well-organized, and prevents mistakes.
Some startups separate their investor data room into different types of documentation based on the stage at which they are within the process. If you are raising your initial round of funding it is possible to withhold certain information until an investor has confirmed their willingness to invest.
While it’s tempting to share as much data as you can, keep in mind that the information you share should support your broader narrative. The story will differ based on the stage in which your business is located, but it should always include key factors that are driving your current success. For example, a seed-stage startup could concentrate on trends in the market or regulatory changes and your team, whereas a growth-stage company might highlight customer references, revenue growth and product expansions.
