A data room is an encrypted virtual space that permits companies to keep confidential information about high-risk transactions. These include mergers and acquisitions as well as initial public offerings (IPO), and fundraising rounds. The data rooms permit authorized individuals — such as investors and due diligence teams to review and assess sensitive information without sharing the original data files.
To make it easier for people to read and comprehend your data, create an organized structure for your folders and clearly label your documents in the data room. This makes it easier for prospective buyers and investors to find the information they need to make informed decisions. It helps you keep your information in order and avoids errors.
Some startups divide their investor data rooms into various sets of documentation according to the stage at which they are on their journey. If you are raising your initial round of capital, you may want withhold certain information until an investor has confirmed their interest in moving forward.
It's tempting for you to provide as much information as you can. But, the information that you provide should be a part of your overall narrative. The narrative you tell will vary based on the stage in which your company is, but it should always contain the key factors driving your current success. A seed-stage company may focus on trends in the market and regulatory changes, as well as your team. In contrast, a growth stage business may emphasize customer references, revenue traction and product development.