Using an Investor Data Room to Facilitate Investor Due Diligence

Due diligence by investors is an essential element of any investment process. The more prepared you are, the faster your investors can finish their review. A data room for investors can make the process simpler for all parties.

LPs may require the full range of documents, such as legal contracts, agreements with customers and suppliers intellectual property, market research, cap tables financials, and other. By using a virtual dataroom, it’s easy to share documents with third parties. This also makes it impossible to send duplicate copies of documents or those that are out of date. The ability to share these documents in a logical and easily navigable investor data rooms can also help to demonstrate your organization and professionalism.

The investor data room could also be used to store and share an investor pitch to a potential investor. Although the investor presentation isn’t strictly part of the due diligence supplementary information, many investors include it as a way to give context and facilitate investors’ access to details they require.

Some founders utilize their investor data rooms to save different details for different types of investors. For instance certain founders have an “draft” investor data room which they only share with investors who haven’t yet signed an offer, and another set of documents for investors who are near to signing a deal. This lets them determine the amount of information they share and ensures the correct information is getting to the right people.