In the course of the process of fundraising for startup companies, it is crucial to communicate the details of your company to investors. It can expedite the process, improve the confidence of investors and improve the likelihood of getting a term sheet. However, the amount of documents you must give prospective investors could quickly grow out of control. In this article, we’ll explain how to manage a data room for investors efficiently.
Create separate rooms for each stage of the more information investment process. This allows you to divide access to documents based on investor interest. For instance, you can create an easy folder system to organize information for early stage investors who have expressed an interest in the company but not yet ready to invest. This stage has documents like strategy documents, product plans and pitch decks.
In the second phase it is possible to provide more detailed data to investors who are getting closer to making an investment decision. This could include a complete financial model and forecasts (both forecasts and historical) and legal documentation, customer and supplier contracts intellectual property information and market research.
These documents will give investors a an in-depth view of your business and provide them with the assurance that you’re meticulous. You could also include previous investor updates to show backers that you are serious about transparency and communication. Your investor data room should also allow you to track which documents were used and for duration. This lets you identify any suspicious activity and take appropriate action if needed.
