An online data room for investors is a digital platform where startups upload critical documents necessary for due diligence prior to a financing round or M&A transaction. This how the legal industry scrambles to handle project management could include, for instance financial forecasts for the company as well as detailed IP documentation. This information is made available to investors who are able to use it to make informed decisions when investing in a startup.
When preparing an investor data room, founders may choose to include the following information:
Pitch Decks or whitepapers: Founders are able to upload their pitch decks and whitepapers that describe how their product or service can solve complicated problems or markets in a clear and profitable manner. Adding this document helps to establish trust and show that they are accountable to investors.
Projections: Founders may include both historical and projected financial statements, which include the assumptions, sources and reasoning behind the projections. This can simplify the due diligence process and help investors comprehend the company’s projected financial performance and growth potential.
People-Related documents: The founders could include resumes of the team’s key players, as well as any employee stock agreement or documents related hiring. Founders may include a growth strategy and go-to-market strategy.
Investor Updates: In the course of fundraising and due diligence process, founders may include a series of investor updates to the VDR. Investors are kept informed of the development of the business and shows them that the company is committed to making the most of their investment.
