A data room is a secure virtual space that permits companies to keep confidential information about high-risk transactions. This includes mergers and acquisitions, initial public offerings (IPO) and fundraising rounds. The data room permits authorized individuals, including due-diligence and investors, to review and evaluate sensitive documents without sharing the original files.
Create a clear and organized folder structure in your data room. You should clearly label each document to make it easier for others to understand and review your information. This helps potential buyers to see the pertinent information they require to make an informed decision. It also helps keep your information in order and avoids any potential mistakes.
Some startups separate their investor data rooms into different sets of documentation based on the stage they are at during the process. For instance in the case of raising your first round of capital you might want to keep certain information secret until you’ve verified that an investor is interested in pursuing further.
While it’s tempting to share as much data as you can, keep in mind that the information you share should be in line with your larger narrative. That narrative will vary depending on the stage of your business but should always include the main forces that are driving your current success. A seed-stage startup may focus on market trends and regulatory changes, as well as your team. In contrast, a growth stage business may emphasize customer references, revenue growth and product growth.