Data Room for Investors - What Startups Should Include in Their Investor Rooms

A data room is a digital space where startups can store all the data they require from potential investors or acquirers to use during an M&A deal. They are typically used to answer questions and conduct due diligence from potential investors during the process of fundraising however, they can be useful for streamlining a funding round by giving investors access to all the documents and data they require in one place.

Startups may include a range of items in their investor data rooms, depending on the stage and scope of their business. For instance, a stage 1 data room will typically include the pitch deck as well as any information that is publicly available about the company. This is meant to give investors a quick overview of the company’s business. A stage 2 data room, in contrast typically, is shared after an organization has received a term sheet and is trying to close an investment. The data room needs to be designed to facilitate streamlined due diligence with a more granular set of documents and information.

For instance a stage 2 investor data room could include things like historical financial information and projections that are based on your current business model. This gives investors an overview of the business’s financial health and provides them with more detailed information to analyze and compare against your competitors. The founders should also include investor updates in this phase of fundraising, to let investors know how the company is doing and if they’re still following through on their plans.