A data room is a central storage space for all the documents and information a company needs to be able to draw investors. Investors look over hundreds of investment options each month, and an organized virtual data room can speed up the process by eliminating the need to constantly ask for documentation from startup.
The structure of an Investor Data Room needs to be designed to meet the needs of investors. This could include sections that include the historical and projected financials of the company. This is typically coupled with the assumptions and reasoning that are used in the development of the projected figures. A section on personal documents, including resumes as well as employment contracts and the list of current team members can be included. Other sections could include the company’s roadmap for product development as well as a whitepaper or presentation deck that outlines the company’s approach to a problem that is complex.
It is suggested that startups create a distinct user interface for each investor in order to ensure that they are engaging the most relevant content. It is also essential that the platform allows investors to send brief messages or make comments, so that they don’t have to leave the dataroom in order to communicate with the company. A user-friendly platform that has a simple layout is ideal because investors usually have a limited amount of time during the day to go through documentation.
Investors need to know the assets and liabilities of a company in its beginning stages to reduce their risks and determine if they are willing to invest. The information room for investors can make this process more efficient, thus reducing the possibility of unpleasant surprises for both parties.
