Investor due diligence is a crucial part of any investment process. The more prepared you are, the quicker your investors can complete their assessment. An investor data room makes the job a lot easier for everyone involved.
LPs are likely to require various documents, including legal contracts, customer and supplier agreements, intellectual property information market research, cap table, financials, and many more. Using a virtual data room makes it simple to share these files with third parties and avoids the possibility of sending duplicate emails or outdated copies being sent out in error. The ability to share these documents in a logical and easily accessible investor data room also helps to demonstrate your organization’s professionalism.
The investor data room is also the ideal location to store and share your presentation deck (or investor pitch) to a potential investor. While the investor presentation isn’t strictly part of the due diligence supplementary information, many founders use it to give context and facilitate investors’ access to the information they need.
Some founders also choose to make use of their investor data room to store various sets of data for different kinds of investors. Some founders, for instance have an investor data room that is a “draft” or investor data room that they communicate with investors who are not yet committed and another set of documents for investors who are about to sign an agreement. This allows them to limit the amount of information they share at any given moment and ensures that the appropriate information is shared with the right people.