how the legal industry scrambles to handle project management
A data room is a digital platform that lets startups upload important documents to ensure due diligence prior to a financing round or an M&A deal. This includes, for example the company’s financial projections as well as detailed IP documentation. The information is made available to potential investors, who can use it to make informed decisions when investing in a startup.
When preparing an investor data room, founders are able to choose to include the following details:
Pitch Decks or whitepapers: Founders are able to upload their pitch decks or whitepapers that describe how their product or service can solve complex markets or problems in a simple and profitable manner. This document can help build trust with potential investors and demonstrate their accountability.
Projections: Founders may include financial statements from the past and projected. They can also provide the assumptions that are based on sources, as well as the reasoning behind these projections. This can make it easier to complete the due diligence process and help investors understand the projected financial performance of a company and growth potential.
People-Related Documents: Founders may include the resumes of key team members and any stock agreements for employees or other documents in connection with hiring. Founders can also choose to include their go to market and growth strategy.
Investor Updates: Throughout the fundraising process and due diligence process, founders may include a series updates to the VDR. This keeps investors informed of the progress of the business and helps them to see that the company is committed to making the most out of the investment.