A data room is a secure platform for sharing confidential business documents to multiple parties involved in a transaction. It is commonly used during M&A as well as fundraising IPOs and legal proceedings. It reduces the risk by making information accessible in a controlled setting and by eliminating time-consuming travel.
Getting Started
The first step in creating the dataroom is to decide what information you’d like to add. While every startup will have different requirements, investors generally want to see similar information. Sort and upload the necessary documents, and then design an organization structure that is appropriate for your transaction. Label the documents and folders clearly for easy navigation. Grupping documents that have similar characteristics will make it easier for investors to locate information.
Include a section about the team, the product and the vision of the company. This will help to build confidence in your business and make it more appealing to potential investors. Beware of sharing data in granular form or other analyses that could confuse investors. This can cause confusion and might signal that you are not fully prepared for the due diligence process.
The most successful fundraises are based off of momentum. It is therefore crucial to have all the relevant information ready before you meet with investors. You will be able answer 99% of the questions investors may ask by following the above outline. This will keep the process moving. Avoid divulging information to the public as this could lead to delays in the funding process.