A data room is an online secure space where startups can gather all the necessary information investors will want to review during due diligence. The most cost-effective virtual data rooms usually have features that let startups control what information is shared with who. This means that the right documents are with the right people. With access controls that are granular, expiring links, watermarking, and password protection, startup teams can ensure that investors get the information they need to make a solid investment decision.
If you’re in the early stages of fundraising and a potential investor is looking for more information about your offering beyond what’s in your pitch deck, you can request that additional information is included in the dataroom. However, it is important to ensure that the information provided in the data room doesn’t overwhelm an investor as it could slow down the due diligence process and could cause the investor to pull out from the deal.
A thorough financial model is an additional important document that’s usually found in investor data rooms. It should be both historical and projected. In the end, this is what many investors are looking for to ensure that the value that you are selling them is indeed present in your business.
Startups should also https://dataroomtools.com/ make use of the investor data rooms to include any other relevant documents, such as legal agreements, HR documents intellectual property market research and much more. But, it is vital that a startup doesn’t overcrowd the investor data room with too much information as this could cause confusion for investors and increase the likelihood of them using or damaging the content.