A data room is an online safe place for startups to gather all the necessary details investors want to look over during due diligence. The most cost-effective data rooms will typically include features that allow startups to manage what information is shared with who. This ensures that the correct documents are into the hands of the appropriate people. Startup teams can secure their investors by providing them with granular access control, expiring links and password protection.

If you are in an early stage of fundraising and a potential investor needs more information about your product than what’s on the pitch deck may be requested that additional information be included in the dataroom. But, it is essential to ensure that the information provided in the data room doesn’t overwhelm an investor as this could impede the due diligence process and could cause the investor to pull out from the deal.

Another important document that is typically found in the investor data room is a detailed financial model. This should be both historical and projected. Ultimately, this is what many investors will look for to make sure that the value that you are selling is actually present in your business.

Startups should also utilize the investor data room to incorporate any other relevant documents such as legal agreements, HR documents, intellectual property, market research and more. However, it is important that a startup doesn’t overflow the investor data https://dataroomtools.com/ room with too much information as this could cause confusion for investors and increase the chance of them committing fraud or compromising the information.