How to Create a Data Room for Investors and Due Diligence Teams

A data room is an secure virtual space where businesses can store confidential data related to high-stakes business transactions. These include mergers and acquisitions (M&A), initial public offerings (IPO) and fundraising rounds. The data room allows authorized individuals, including due-diligence and investors, to examine and assess sensitive documents without sharing the original documents.

Create a clear structure for your folders in your data room and clearly label all documents to make it easier for others to understand and access your data. This will allow prospective investors and buyers to find the information they need to make informed decisions. It also helps keep your information well-organized and helps avoid potential errors.

Some startups separate their investor data room into different types of documentation in accordance with the stage they’re at on their journey. For example that if you’re only raising an initial round you may need to hold certain information until you’ve established that an investor is interested in pursuing further.

While it’s tempting to share as much data as you can, remember that the information you share should support your broader narrative. The story will differ based on the stage in which your business is located, but it should always include the most important factors driving your current success. For example, a seed-stage company might concentrate on market trends or regulatory changes and your team, whereas a growth-stage company might highlight customers’ references, revenue growth and product expansions.