When a business is valued, it usually involves analyzing a variety of data and documents. The data is compared with similar businesses or organizations and a value established. A lot of this due diligence process is done with the help of a data room which is a repository online that allows users to access and exchange data in a secure manner. Data rooms can be used for various purposes, including mergers and acquisitions (M&A) as well as fundraising, an initial public offering (IPO) and legal processes.

Investor data rooms are an essential tool for any business. They contain all financial information potential investors would require to evaluate your business, as well important background data like a history of cap-table and funding rounds. They also provide a great way to highlight the key aspects of your products such as engagement and retention metrics.

The first step to set up the investor data room is to choose what information should be included. Start by putting together your pitch deck as well as financial basics. It is also beneficial to include any projections or other documents that investors might require prior to making a decision to invest.

Investors and VCs will need to review an entire investor data room prior to presenting you with a term sheet which is their first offer for funding. Giving them stage 1 access without this information is likely to discourage them from proceeding, as they will have to invest time and resources in doing the full due diligence.

data room benefits for investment banking