A data room is an encrypted virtual space that permits companies to store sensitive information regarding high-stakes transactions. This includes mergers and acquisitions, initial public offerings (IPO) and fundraising rounds. The data room permits authorized individuals, including due-diligence and investors, to look over and evaluate sensitive files without sharing the original files.
Create a clear folder structure in your data space and clearly label each document to make it easier for others to comprehend and view your information. This makes it easy for potential buyers to see the pertinent information they require to make an informed decision. It helps you keep your information well-organized and helps avoid mistakes.
Some companies divide their investor data room into different documents, based on where they are in the process. For example in the case of raising an initial round, you may want to withhold certain information until you’ve established that an investor is interested in moving forward.
It’s tempting for you to provide as much information as possible. However, the data that you provide should be a part of the overall narrative. The narrative you tell will vary based on the stage in which your company is however, it should include the most important factors driving your current performance. For instance, a young startup might focus on trends in the market regulatory changes, market trends, and your team, whereas growing companies might focus on customer references, revenue growth and product expansions.
