A VC or an investor has expressed an interest in your venture and asked for more information. They want to verify what you’ve shared in your pitch deck and are seeking more granular information on your business model, its traction and financials. This is where an investor data space is a must.
The difference between the winners and losers of an investment deal is made by doing it the right way. Investors are busy and don’t have the time to wait for slow processes, therefore you must be ready as soon as an interested investor comes in. The proper information in a data room can help both parties save time and show that you are serious about fundraising.
To run a successful investor data room, begin by creating an organizational structure that is clear and logically labeled. Only include documents that investors need to conduct their due diligence. This will differ depending on the stage of the deal, but typically includes:
IP Information (patent filings and trademarks)
People-Related Documentation (resumes, employee stock agreements and documentation on hiring)
Financial Information (historical and projected), including assumptions, sources, and the reasoning to support these projections
You should consider incorporating documents to prove that your venture is in compliance with national, local and international regulations. This is an excellent way to reassure investors that your company is in compliance with local laws, national or international standards. Last but not least, include files on sustainability over the long run (e.g. carbon emission reporting system or other measures of environmental sustainability). Using a virtual data space with analysis of file access can allow startups to plan ahead of meetings with investors and other stakeholders. This can result in more effective conversations and an understanding of what concerns investors are most concerned about.