The due diligence of investors is an important part of any investment. The more prepared you are, the faster your investors can complete their due diligence. An investor data room can make the process easier for all parties.
LPs are likely to require various documents, including legal contracts, supplier and customer agreements as well as intellectual property information market research, cap table, financials, and much more. Using a virtual data room allows you to share these documents with third parties and avoids the possibility of receiving duplicate emails or old copies being sent in error. Providing these documents in a structured and easily accessible investor data room also helps to demonstrate your organization and professionalism.
The investor data room is also the ideal location to store and give your presentation deck (or investor pitch) for a prospective investor. While the investor presentation isn’t part of the supplementary due diligence data, many founders incorporate it to give context and facilitate the investor’s access to the details they require.
Some founders also use their investor data room to store different sets of information for different types of investors. Some founders, for instance, have an investor data room that is a “draft” and investor data room they only communicate with investors who are not yet committed and another set of documents to investors who are about to sign a deal. This allows them to control the amount of information they share at any given time and ensures that the correct information is distributed to the appropriate people.
