The disclosure of information to investors through an investor data room is a crucial element of due diligence in startup fundraising. It can help speed up the process, boost confidence and increase your chances to get the term sheet. However, the amount of documents that you need to be able to share with potential investors can quickly grow out of control. In this article we will discuss how to run a data room for investors efficiently.
Create separate rooms for each stage of the investment process. This allows you segment access to the documents based on investors’ interest. For example, you can use a simple folder structure to organize the data for early-stage investors who have indicated an interest but are not yet ready to invest. This stage is comprised of documents like strategy documents, product plans, and pitch decks.
In the second phase you can provide more detailed information for investors who are getting closer to a decision. This can include a detailed financial model and forecasts (both projected and historical) and legal documentation such as supplier and customer contracts intellectual property data and market research.
These documents can give investors an even more complete picture of your company and provide them with the assurance that you’re meticulous. You can also include previous updates to investors, which will show investors that you value transparency and communicating with investors seriously. Additionally, your investor information room should permit you to track who has accessed which documents and for the duration of. This allows you identify any suspicious activities and take corrective actions if necessary.