A data room is a secure location to store sensitive documents of a sensitive or confidential nature that are required for due diligence in M&A transactions. Previously, physical rooms were used for this purpose, but thanks to the advancement of technology virtual data rooms are becoming increasingly popular and provide the same level of security as traditional methods.
Accessing a thorough investor data room can allow founders to get a deal done quickly since investors will be able to look over the documents in a matter of hours instead of weeks or months. New entrepreneurs may find it difficult to determine what information they want to include in their investor data rooms. There are some guidelines that can be a great place to start.
Investors are looking for important information that will provide them with a greater understanding of your company. This could include your financials and market research as well as a clear presentation on your business plan. It’s important to remember that the amount of information you need to provide an investor will depend on the stage that your business is at. For example, an early-stage startup may require fewer financials than a Series A business.
Avoid sharing fragmented or unusual analyses since this could make it difficult for investors to understand the information. It’s also not helpful to share non-standard charts or graphs in the event that they add nuance or depth to your presentation. This can be accomplished by focusing on the key metrics that are easy to understand for investors (e.g., highlighting the number of cohorts that are engaged or retained).