The investor data room is an important central repository for all due diligence documents that ensures all the information is in one place. It also helps streamline the process, and provide both parties peace of peace of. It's a must for any startup that seeks to raise money from outside investors or buyers Some founders may be unsure whether it's worth the additional effort and expense.
It's contingent on how much information is shared and the manner in which it is presented. Investors want to be able to access all the information they require to make a decision, however providing excessive or irrelevant information can clog up their time and reduce the impact of critical information.
As an entrepreneur, you'll need to decide which details you put in your investor data room and only disclose only the information that is crucial to the due diligence process. You should also consider the type of investor you're targeting and adapt the content accordingly.
For instance, you may include sections for industry reports and publications, customer references and testimonials and a competitive assessment. You'll need to include a section on the legal aspects of your business, including documents like articles of incorporation, corporate bylaws and other documents that pertain to the organization's governance and structure.
It is also important to include information on the intellectual property your business owns (patents and trademarks). Angels and VCs use this as a primary aspect when making investment decisions. This information can speed up the deal, and also ensure that investors are aware of all the risks that come with their investment.