Template and Guide

The Data Room

Once you have advanced your discussions with investors and progress with the deal, they’ll ask you for a virtual data room (VDR/DR) access, to want to view under the hood and understand how you back the claims you’ve made previously.

The Big Things

Most deals die in the data room. Why? Probably because what you have told earlier wasn’t backed by the materials in the data room. The data room adds to depth to your pitch deck and the story, by providing supplemental materials about the topics (market, financials, team, product, growth, …) and also explains your legal information, board meetings, cap table and more. The exact structure of your data room again depends on your business. Science-based or deep-tech start-ups will have to answer different questions. NDA required beyond this point.

How To Build Your Data Room

There are many different providers out there. Many use notion.so or DocSend. Due to my affinity for WordPress, I created my data rooms on base of WordPress -which also allows me to add website analytics to understand what user spend how much time on what page, and used DocSend to distribute pitch decks.

Preparation

Investors will expect to sign an NDA at this point, because you will disclose confidential material. After that, they’ll expect you to send a link and login credentials (user/pw) to access the data room, where they find an overview and in-depth materials.

Once a data room is out, the data room is out. Don’t let people in your data room, while you’re still making changes, because it might be a red flag if suddenly numbers or contracts change, and you don’t want to explain every change.

Content

Consider your startup is a financial product, and people now want to subject your startup to due diligence. This means that they want to understand the legal base, tax compliance, team, contracts, market analysis, cap table, strategies in depth. But not every investor will focus on the same topics. Some might be more inerested in the legal aspects, while others want to truly understand your product from a customer perspective.

Balanced and Recent

Don’t overshare all contracts that you have entered, and focus on the most important materials. It draws potentially attention from important materials.

If contracts or content has different version, only share the recent ones and stick with those.

Sample Data Room Outline

  1. Executive Summary
  2. Key Team (and contracts)
  3. Commercial details and customers
  4. Product details and demos
  5. Technical details and IP disclosure
  6. Market research
  7. Financing Round – Need and Usage
  8. Legal & Tax
    1. Org chart
    2. Incorporation materials
    3. (earlier invesment contracts)
    4. Financial statements (P&L and BS)
    5. Tax information
    6. Cap Table and ESOP
  9. Confidential Pitch Deck