Startups require a lot of information to prove that they can grow their businesses. This is why they typically use data rooms to organize their documentation and share it with potential investors. Data rooms can also facilitate due diligence, which is vital for any company looking to get a major deal. A well-prepared virtual room requires more than the pitch deck or financials.
What you include in your startup data room will be contingent on the type and amount of funding that you are seeking. The data should always support the larger narrative of the company’s development. The narrative could be built on market trends and regulatory changes or other compelling “why now?” forces in the case of a company in the beginning stages. A business that is in the later stage may include more in-depth information about important relationships, metrics, accounts, product expansions and new business lines.
Include any reports or market research that you’ve conducted to help your investor know the context behind these data points. This is an excellent method of demonstrating your professionalism to prospective investors and assist them in deciding whether or not to make the investment. Other essential pieces of information include an executive summary and a risk/reward matrices. It is also important to include an analysis of your product’s performance in comparison to similar products on the market.
Include your legal documents in the investor data room. This includes your articles of incorporation and business certificates. Include your company’s bylaws in order to help an investor get a better understanding of your governance structure. Also, you should provide the current shareholders as well as a summary of the structure of equity for your company.
In addition to these basic documents, you’ll need to include a section that contains documentation for team members and employees. This includes the company’s current and former employees along with their pay and their titles. It’s also recommended for startups to include onboarding documents, which can provide investors with insight into the hiring process and culture.
It is crucial for founders to know that they may need to add additional data to the investor data space based on the nature of the deal. For instance in the event that you’re taking your case to court to resolve an intellectual property dispute, you could have to provide a more precise set of data to a judge or other parties involved in the case.
You do not want potential investors having access to your private information without proper security measures. PandaDoc’s secure data room lets you share sensitive files with limited partners, third-party auditors and portfolio companies, all while keeping your information private. Automated email notifications as well as an audit trail that is permanent help ensure that only the right individuals have access to your files.
Start by creating a PandaDoc virtual dataroom today and find out how easy it is to share sensitive data with others, even in the cloud.
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