How to Prepare a Data Room for Investor Due Diligence

Due diligence by investors is an important step in the investing process. It’s the opportunity for investors to dig into the company’s financials and documents, assess risk and decide whether or not to invest in the company. A well-prepared and organized data room can speed up the process, decrease the likelihood of misunderstandings or miscommunication, and boost confidence in the decision of the investor to proceed.

This article will highlight a few of data room for investors the essentials all startups should have prepared prior to pitching investors.

Investor Updates

Investor updates can be an excellent way to show investors that you’re still following your plan and progressing towards your goals. This is particularly crucial in the initial stages. It will also allow them to assess how far you have achieved since the last time you met and help create confidence.

Intellectual Property Assets

Angels and Venture Capitalists typically have an interest in a business’s intellectual property, which could be a significant component of its valuation. Make sure you showcase your IP by including trademarks, patent filings, and other pertinent data points even if they’re not directly connected to the product you’re working on.

Cap Table

A clear table of your cap shows potential investors the amount of ownership you own and how it’s broken into pieces. Include your articles of incorporation, which provide legal background for the structure of your business.

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