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[Version updated last by Andrea Zaragoza Ballesteros, September 2024. We'll continue to update this page ongoing.]
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Building a company always requires more of an organized and data-driven approach than we as founders realize. There's no time that's more important than during your fundraising process. As you begin to speak with investors that will undoubtedly end a first or second meeting with today's ultimate question, "Is there a data room you can share for us to dive deeper?" Don't panic; we're going to break down all the questions you may have surrounding that stomach pitting question.
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Let's start with the basics. A data room is an organized and singular (ideally) location where you store all the relevant information about your company, products, and services for investors (or otherwise) to accomplish additional diligence before making the decision to invest (or not).
It's also important to note that data rooms are living organisms and will grow over time, in many cases mid-fundraise (i.e., updated models, presentations, new materials, closing documents, etc.) and should live internally after a fundraising event.
Each company is different on where or how they may choose to host their data room. In any case, when choosing, consider the following.
Choose a platform or location that viewing is PRIVATE and not available to the public unless intended;
Select a platform that meets your needs. Highly used platforms include Dropbox, Box, Google Drive, DocSend, Notion, and Github;
It's important to control access via sharing with e-mails - i.e. you can give access as fast as you can take away - and you should following the close of the investment process;
It's recommended regardless of which platform you choose for your data room to upload your latest company presentation to DocSend and require an e-mail address to be inputted to view it. They also provide analytics that could be useful for future presentations.
Over the last few years, we've seen a growing trend of founders asking investors if they would be willing to sign an NDA before receiving access to the company's data room. Traditionally, many investors will be reluctant to sign any NDAs until late-stage or in rare cases — this is due to the high volume of prospective deals they see at a given time. They may invest in a competitor later down the line. Again, today we see that change slightly. Don't be offended if an investor tells you no when asked. Instead, as the founder(s), you can choose to share without it or not. This has also led to creating of the "Lite-Data Room," which has high-level information without exposing too much sensitive company information.
For your initial pre-seed & SEED rounds, you want to ensure you have at least the following documents included in your data room. These are the most requested and necessary documents for any investor to view and you as a founder should have.