A data room is a device which assists in due diligence during any major financial transaction, like a sale of a business or a venture capital round, or an initial public offering (IPO). By keeping data room business all important documents in a virtual space, companies can ensure that only the information required by third parties is available and sensitive data is protected from unauthorized disclosure.
When creating an investor data room, the founders can opt to organize the files using a top down or bottom-up method. The latter involves creating main folders that are associated to specific types of information, project stage or department and subfolders that further break down the files into easy-to-read structures. The latter is a more efficient solution that allows users to access data by simply clicking on a document name or image.
Documents that are commonly found in the investor dataroom include a presentation deck, a one-page summary about the company, and an extensive overview of market including competitor analysis and testimonials from customers. It’s also a good idea that the founders to create a document which details the current roles and compensation of their team.
Include a section that focuses on the financial historical and/or forecast performance of your business. The financials should be concise and clear, supported by reliable sources and an reasonable assumptions. Founders can also choose to include an analysis of competitors, a product development roadmap, or other legal documents pertinent to the process of fundraising. A section about the brand and marketing strategy of the company can also be helpful.