How to Prepare a Data Room for Investor Due Diligence

Due diligence by investors is an essential step in the investment process. It’s the opportunity for investors to examine the financials and other documents of a startup to assess risk and decide whether or not to invest in the company. A well-organized and organized data room can help expedite the process, reduce the likelihood of misunderstandings or miscommunication, and increase confidence in the decision of the investor to proceed.

While there are many items to include in a data room this article will outline some of the most important items that all startups must have in place prior to pitching to investors.

Investor Updates

Investor updates are an excellent way to show investors that you’re still following through on your plan and progressing toward your goals, particularly in the beginning stages of fundraising. This will also help them to understand how far you’ve come since your last meeting and help build trust.

Intellectual Property Assets

Venture Capitalists and Angels are usually interested in the intellectual property of a company which plays an important part in the valuation of the company. Include patents, trademarks and other relevant data even if it’s directly connected to your product.

Cap Table

A clear cap table shows potential investors the amount of ownership you own and how it’s broken down. It’s also a good idea to include your articles of association, which provide legal background to your company’s structure.