A data room is a secure space to store confidential documents of a sensitive or privileged nature that require due diligence during M&A transactions. Previously physical rooms were utilized for this purpose, however with the technological advancements virtual data rooms have become increasingly popular and offer the same level of security as traditional methods.
Investors will be able to review the documents in just a few hours rather than weeks or even months. The new entrepreneurs might find it difficult to determine what information they would like to include in their investor data room. Thankfully, there are some basic guidelines that can be used as an excellent point of reference.
Investors need to know the most important information that will allow them to comprehend your business. This may include your financials along with market research and an enlightened presentation of your business plan. It’s also important to keep in mind that the amount of information you have to provide to an investor will vary based on what stage your company is at. For instance, a young startup will probably require less financials than a Series B company.
Avoid sharing fragmented or unusual analyses as this can make it difficult for investors to comprehend the data. It’s also not recommended to share non-standard charts or graphs, in the event that they add nuance or depth to your presentation. This can be done by focusing on the most important metrics that are easy to comprehend for investors (e.g., highlighting the retention or engagement cohorts).