22 Out How to Create a Data Room for Investors and Due Diligence Teams
A data room is a secure virtual space where companies can store confidential information related to high-stakes business transactions. These include mergers and acquisitions, initial public offerings (IPO) and fundraising rounds. The data rooms permit authorized individuals — which includes due diligence teams and investors to look over and evaluate sensitive information without sharing the original data files.
Create a clear and organized folder structure in your data space and clearly label your documents to make it easier for others to comprehend and access your data. This will make it easier for prospective investors and buyers to locate the information they require to make informed decisions. It also helps keep your information in order and avoids any potential mistakes.
Some startups split their investor data rooms into different documents depending on where they are in the process. If you are raising your first round of funding it is possible to withhold certain details until the investor has expressed desire to move forward.
It’s tempting for you to provide as much information as you can. However, the information that you provide must be part of your overall story. The story will vary based on the stage of your business but should always include the main forces that are driving your current success. A startup in the early stages may concentrate on trends in the market and regulatory changes along with your team. A growth-stage business might emphasize customer references, revenue growth and product expansions.