Startups need a lot of documents to prove that they are able to grow their business. This is why they typically use data rooms to manage their documentation and share it with potential investors. A data room can streamline the due diligence process, which is vital for any business looking to get a major deal. A well-planned virtual room will require more than a pitch deck or some financials.
What should you include in a startup data room is dependent on the kind of funding you’re looking to get. However, the data should support your larger narrative about the company’s expansion. This narrative could be driven by market trends or regulatory changes, or other compelling «why now?» forces in the case of a business in its an early stage. A business at the later stage may include more detailed information about key relationships, metrics, accounts, product expansions, and new business lines.
To help your investor comprehend the context for these data points, it’s important to include any first-hand market research and public reports that you have. This is a great method of demonstrating your professionalism to potential investors and also help them to decide whether or not to make the investment. Other important pieces of information include an executive summary and a risk/reward matrices. It is also important to include an analysis of your product’s value in relation to similar products in the market.
You’ll want to include your legal documents in the investor data room, including your articles of incorporation, business certificates and tax information. Include your company’s bylaws as well to help investors comprehend your governance structure. You should also include the names of shareholders as well as an overview of the equity structure of your business.
In addition to these essential documents, you’ll need to include a section that contains documentation for team members and employees. This includes the company’s former and current employees along with their pay and their titles. Startups should also provide documents on the hiring process that will give investors an insight into the company culture and hiring process.
It’s vital for founders to be aware that based on the deal, they may be required to add more information to the investor data rooms. If you’re going to judge an intellectual property dispute, for instance you might need to provide more precise information to a judge or other parties involved in your case.
You don’t want a potential investor accessing your private information without the proper security measures. PandaDoc’s secure data room allows you to share confidential data with limited partners, auditors from third-party audits and portfolio companies, while maintaining full privacy. With automatic email notifications as well as an audit trails that are unchangeable, it’s easy to ensure only the right people have access to your files.
Start by creating a PandaDoc virtual dataroom today for free and discover how easy it is to share sensitive files with others, even via the cloud.