A startup’s data room is a kind of virtual repository that aids in the management, communication and processing documents using a secure platform. It assists startups in fundraising and due diligence. Typically, the information that is shared through a data room includes documents for company organization such as pitch decks financial information, documents related to people and market information. To protect data, startups must be cautious when sharing proprietary information like codes or trade secrets.
Investors can find any document or item within the data room, but it should be well-labelled and clear to allow them to find specific items. It is also a good idea to separate the various documents into stages. Stage 1 data rooms may contain documents like pitch decks, product plans, and strategy documents to provide investors a broad overview of your company, while stage 2 data rooms could include more sensitive documents, such as HR and legal agreements.
It’s also a good idea to include any references to customers in the data room since this can be a major decision-maker for certain investors. This also reduces the effort of calling up these customers, since they can browse the notes within the data room. It is also important to include any information regarding intellectual property in the data room since it is a vital area that VCs are looking for. This includes trademarks, trademark numbers, and patent filings.