What Should Be in Your Investor Data Room

November 24, 2021

The concept of having a data room is often debated between investors and founders. Some believe it can slow down the process of either raising capital. Others, meanwhile, believe having a data room prepared ahead of time is an excellent way to impress potential investors and streamline the fundraising process.

A data room can help address common questions in the due diligence process that most investors will ask. In addition, having your documents housed in one place can help demonstrate a structured, well-managed business. It can also  ensure you control the story of your data while also limiting back and forth communication, which can  limit the time you spend  on your operations.

If you believe that having a structured and easy way to share your crucial information with potential investors is the right move for your business, you may be wondering, what to include in your data room.

To help answer this question, our team has put together a list of items you may want to include.  

-Corporate overview deck

-Executive leadership bios

-Business Plans

-Product and service information, including roadmaps and pricing

-Technology investments

-Marketing plans, market research, strategies, and related materials

-Sales strategy and pipeline, including existing customers’ MRR and ARR

-Company financials, including profit and loss statements and projections for the next year

-Amended and restated articles of incorporation

-Voting agreements

-Investor rights agreements

-First refusal & co-sale agreements

-Stock purchase agreements

-Capitalization table

-Details on previous raises

-Tax returns, audits, financial evaluations, and other reports from third-party professional service providers

-IP, including patents and trademarks

-Operational liabilities, including capital expenditures, commercial leases, and R&D investments

-Employee information, including compensation and contracts

-Legal agreements

When housing the data, here are a few tips to keep in mind:

Identify Your Audience: Having all documents housed in a base structure is a significant first step, but think about the different views, perspectives, and roles of the individuals evaluating your documents. From there, you can create other sub-viewing structures and access rights to ensure that your targeted user only sees the items most important to their task.

Lock it Down: Be sure that all documents are secured and cannot be altered, copied, shared, or downloaded without permission.

Easy to Update: Changes may happen. What might have been your corporate overview when you started setting up the data room may evolve over time. Make sure that you set up the data so that adding, removing, or editing documents is painless.

User Tracking: Having insight into who has accessed what documents at what time and for how long will give you great insight into how your data room is being used. If you notice that certain documents are not being accessed, you can consider removing them from the data room.

Communication Tool: Your data room should allow for, comments and questions, and give you the ability to track notes made by users and respond through the communication platform.

Looking to raise capital or just want a good conversation? Talk to Us.  Element Finance offers term loans for growing SaaS companies, and we don’t require warrants, board seats, or personal guarantees.

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