Preparing Your Data Room for the Investment Deal Process

Investors require a great deal of information in order to conduct their due diligence. This is why it’s important to prepare your data room as soon as you begin fundraising. By including all of the required documents, you can speed up the investment process.

To make navigation easier to navigate, it is recommended that a document be included with an index of contents or a table of contents for each section in the data room. Private equity firms will appreciate well-prepared documentation which is easy to navigate. It is also important to note any changes made from the initial upload of the document. This indicates that you are always on top of the situation and also your willingness to be transparent throughout the entire process.

Incorporating historical and/or projected financial statements is among the most common requests from investors. This will allow them confirm the accuracy of your numbers and ensure that they are in line with your pitch deck. In addition, if providing projected financials, it is a best practice to include the assumptions, sources, and reasoning that underlie those projections in your data room.

Some founders opt to include other information like resumes of key team members as well as employee stock agreements and other documents regarding hiring. This will give investors a better understanding of who the company is and the strength of its staff. Additionally, some entrepreneurs may include an analysis of market trends or a growth strategy to demonstrate that the company is poised to succeed in its industry.

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