If you’re in the process of raising Series A financing or trying to close a merger acquisition or investment deal, the data room for investors is a must-have tool to conduct due diligence. It allows you to organize all documents into one place and permit third parties to access the information in real time without having to send an email or request updated copies.

While it’s tempting to cram your investor data room with all the information you have make sure not to overwhelm potential investors. The accumulation of too many documents can make the due diligence process lengthy and stressful for both parties. A well-organized and organized dataroom is vital to ensure that investors are able to quickly and efficiently assess the financial health of your business as well as operational strategies and legal standings.

Investors should be able view your startup’s historical and projected financial statements, as well as the reasoning of any assumptions and modeling. You could also include a list of previous capitalization tables, financing agreements as well as other information. Entrepreneurs with a compelling pitch that attracts VC interested investors often upload their own copy to their data room.

The most important thing is that your investor data room should have clearly defined headlines for each slide. It is often difficult for an investor to navigate a lengthy technical slideshow if titles are unclear or misleading. Avoid using non-standard analysis in place of the standard ones (e.g. showing a portion of a profit and loss statement vs a full view).

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