A data room is an encrypted virtual space that allows businesses to store sensitive information regarding high-risk transactions. These include mergers, acquisitions and initial publicly-traded offerings (IPOs) and fundraising rounds. The data room allows authorized individuals, including due-diligence teams and investors to examine and assess sensitive files without sharing the original documents.
Create a clear folder structure in your data space and clearly label all documents to make it easier for others to understand and access your data. This makes it easy for buyers to find the relevant data they need to make an informed decision. It helps you keep your data well-organized, and prevents mistakes.
Some startups separate their investor data room in different documents, based on where they are in the process. For instance in the case of raising your first round of capital you may need to withhold certain information until you’ve confirmed that the investor is interested in pursuing further.
It’s tempting to provide as much information as you can. But, the information that you provide should be a part of the overall narrative. This narrative will change depending on the stage your company is however, it should include key factors that are driving your current success. A seed-stage startup may focus on trends in the market and regulatory changes as well as your team. A growth-stage business may emphasize customer references, revenue traction and product development.