An online data room for investors is a platform where startups upload critical documents related to due diligence before a funding round or M&A transaction. This could include, for example the company’s financial projections and the company’s detailed IP documentation. The information is made available to potential investors, who are able to use it to make informed decisions when investing in a start-up.
When creating an investor data room, investors can decide to include the following details:
Whitepapers or Pitch Decks Founders are able to upload their pitch decks as well as whitepapers that explain the way their product or service solves the complex problem or market in a concise manner and is profitable. This document will help build trust with potential investors and prove their accountability.
Projections: Founders may include both historical and projected financial statements, including the assumptions, sources, and reasoning behind the projections. This can simplify the due diligence process and aid investors in understanding the company’s projected financial performance and growth prospects.
People-Related Documents: Founders may include resumes of key team players, as well as any employee stock agreement or documents regarding hiring. Founders can also choose to include their go-to market and growth strategy.
Investor Updates: In the course of fundraising and due diligence process, founders can include a series updates to the VDR. This helps keep investors informed about the progress of the business and helps them to see that the company is dedicated to making the most out of the investment.