If you’re a new company seeking capital, a data room is a vital tool to help accelerate the due diligence process. It will allow buyers or investors of your company to look over the information and documents in a structured way which will increase the perceived value and reducing the time required to conclude an acquisition.
In stage 1 or 2 investors will require access to a range of documents. It is essential to select the most relevant documents and then gather, organize and label them properly. Nobody, whether an investor or authorised person, would like to go through a plethora of documents that only waste their time.
A business plan, financial report as well as intellectual property information ownership and incorporation information, and pitch decks are some of the most important documents. You may also wish to include past investor updates, since they show that you are a transparent and honest business.
In addition to your data rooms, you should be cautious about who you grant access to. Using a virtual data room (VDR) with activity tracking will guarantee that you only provide access to people who need it and keep track of how long they spend on each document.
Startups often fail to realize that their intellectual property is valuable and should be included in a data room, too. This could include trademarks, patent filings and internal memos. The inclusion of this information shows that you care about your IP and could help improve your startup’s standing in a negotiation.