A data room is a system which assists in due diligence during a major financial transaction, such as a sale of a company, a venture capital round or an initial publicly offered (IPO). By placing all important documents into an online environment, companies can ensure that only the information needed by third parties is available and sensitive data is safe from disclosure by unauthorized parties.
When constructing an investor data room, the founders may choose to arrange their files in a top-down or bottom-up method. The first method involves creating main folders that are associated to specific types of information like project stages or departments and subfolders that further split documents into easy-to-navigate categories. The second solution is more efficient and allows users to access information by clicking on the name of a document or image.
Documents typically found in an investor dataroom comprise a slide deck, a one-page summary on the company, and an extensive overview of the market including competitor analysis and testimonials from customers. It is also beneficial for founders to include a document outlining the current role of the team as well as the compensation they will receive.
Include a section highlighting the financial performance of your business. The financials should be clear and concise, backed by reliable sources and logical assumptions. Founders can also choose to include a competitor matrix, a product development roadmaps and other legal documents relevant to the process of fundraising. A section about the marketing strategy and brand of the company could be beneficial.
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