A data room is a digital platform that lets startups upload important documents to ensure due diligence prior to a financing round or an M&A deal. This usually includes the company’s financial projections, as well as detailed IP ownership documents. The information is then accessible to investors who are interested and could assist them in making an informed decision about investing in the start-up.
Founders are able to include the following information in an investor data room:
Pitch Decks or a Whitepaper: Founders may upload their pitch decks, as well as whitepapers that explain how their product or service solves complex markets or problems in a simple and profitable manner. This document can help to establish trust with investors and prove their accountability.
Projections: Founders can include historical and projected financial statements. They can also include the assumptions, sources, and reasoning behind these projections. This will simplify the due diligence process, and help investors better understand the company’s projected financial performance and growth potential.
People-Related Documents: Founders can include the resumes of team members and any employee stock agreements or documentation regarding hiring. The founders can also include their go-to market and growth strategy.
Investor Updates: Throughout the fundraising process and due diligence process, founders can include a series of investor updates to the VDR. This keeps investors up to date on the business’s progress and allows them to know that the company is dedicated to making the most of its investment.
)
)