A data room is a secure platform for sharing confidential business documents with all parties involved in a transaction. It is used in fundraising, M&As IPOs and legal proceedings. It reduces risk by making information more easily accessible in a controlled atmosphere and also by reducing time-consuming travel.
Getting Started
The first step to creating the dataroom is to decide what information you would like to include. Although every startup has different requirements, most investors will require similar information. Organize the documents, upload them and then create folders that make sense for your business. Label the folders and documents for easy navigation. Grouping similar documents together will make it easier for investors to access the information they require.
Include a section that explains the team, product and vision of the business. This information will help build trust in your company and make it more likable to potential investors. Avoid sharing information that is too detailed or unconventional analyses that may confuse investors. This can be distracting and might signal that you aren’t prepared for the due diligence process.
Most successful fundraises are driven by momentum. It is therefore essential to have all of the information prepared prior to meeting with investors. By following the guidelines above, you’ll be able answer 90% of questions that your investors may ask and continue the process forward. Do not give out details in small doses, because this can cause delays in the process of funding.