An online data room for investors is a digital platform where startups can upload vital documents relevant to due diligence before a funding round or M&A transaction. This can include, for instance financial forecasts for the company and the company’s detailed IP documentation. This information is made available prospective investors, who are able to use it to make informed decisions when investing in a startup.
Founders can include the following information when they prepare an investor data room:
Whitepapers or Pitch Decks: Founders can upload their pitch decks and whitepapers that outline how their product/service solves complex problems or markets in a clear manner and is profitable. This document can help to establish trust with investors and show accountability.
Projections: Founders could include historical and projected financial statements. They may also include the assumptions of the source, reasoning, and assumptions behind these projections. This can streamline the due diligence process and help investors comprehend the company’s forecasted financial performance and growth prospects.
People-Related Documents: Founders can include the resumes of key team members and any employee stock agreements or documents in connection with hiring. Founders may also opt to include their go to market and growth strategy.
Investor Updates: Throughout the fundraising process and due diligence process, founders may include a series of investor updates to the VDR. Investors are kept informed of the progress of the business and lets them know that the company is committed to making the most of their investment.
