A data room is a space that can be used to store confidential documents that are sensitive or to hold privileges during due diligence for M&A transactions. Previously physical rooms were utilized for this purpose, but thanks to the advancement of technology, virtual data rooms are becoming increasingly popular and provide the same level of security as traditional methods.
Investors can review the documents in a matter of hours rather than weeks or even months. But, deciding what to include in an investor data room can be daunting for entrepreneurs who are new. There are some guidelines that can be a great place to start.
Investors are looking for key information that will provide them with a greater understanding of your company. This could include your financials, market research, and an enlightened presentation of your business plan. It’s also important to keep in mind that the amount of information you have to provide an investor will be contingent on the stage your business is at. A start-up in the early stages will have to present fewer financials compared to a Series A business.
It’s important to avoid sharing incomplete or unorthodox analyses, as this can make it difficult for investors to follow the data. It’s also not advisable to share non-standard charts or graphs in the event that they enhance your presentation. This can be accomplished by focusing on the most important metrics that are easy to understand for investors (e.g. by highlighting the retention or engagement cohorts).
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