How to Prepare a Data Room for Investor Due Diligence

Investor due diligence is a crucial step in the investing process. Due diligence for investors is an opportunity for investors dig through the startup’s financials and documents, to evaluate the risk and decide if they want to invest. A well-organized and well-organized data room can help expedite the process, lessen the risk of misunderstandings and miscommunication, and boost confidence in the investor’s decision to proceed.

While there are many items to include in a data area, this article will focus on a few of the most important items that all startups should have ready before pitching to investors.

Investor Updates

Investor updates can be an excellent tool to show investors you are still executing your plan and moving toward your goals. This is especially crucial in the initial stages. This will also give them a sense of how far you’ve come since last time they saw you and can help to build confidence.

IP Assets

Angels and VCs usually have an interest in a business’s intellectual property, which could be a big part of the value of the business. Make sure you showcase your IP by including patent filings, trademarks, and any other relevant information, even if they’re not directly related recommended you read to the product that you’re working on.

Cap Table

A clear cap-table outlines to potential investors how much ownership you have and how it is broken into pieces. Include your articles of incorporation which provide legal context for your company’s structure.

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