Investors and founders both agree that the data room is an essential part of venture capital deals during the initial stages. They are a central location for the storage of important documents and details throughout the due diligence process. It is nowadays easier for startups than ever before to create and manage data spaces. However, it can be difficult to know what a startup really needs one. If there’s no sensitive information contained in a company plan document or financial report the startup might not need a data-room.
In the past, companies would physically store sensitive or proprietary documents in a secured room that potential buyers could access as part of the due diligence process. These documents are now typically stored in a virtual investor data room.
Investors require a lot information to make an informed decision and evaluate the potential of a new venture. Uploading these documents to an investor data room is more effective than sending multiple spreadsheets that can easily be lost or become outdated.
Organization is the key to a successful investor dataroom. Create an overview folder which contains all the relevant information you wish to give investors. This folder should contain your pitch, a basic overview of financials (cash metrics and P&L, projections) Cap table, a list containing pending and commited investments, and any research that you have conducted in-person. It is also important to provide references from clients and references to show that your company has traction on the market.
dataroomsonline.net/how-to-effectively-raise-capital-on-kickstarter-and-indiegogo/