Preparing Your Data Room for the Investment Deal Process

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Investors need a lot of information to perform their due diligence. Therefore, it is crucial to set up your data room as fast as you can once you begin your fundraising efforts. By incorporating all the necessary documents, you can accelerate your investment deal process.

To facilitate navigation, it is recommended that the document is accompanied by an index of contents or table of contents for each section in the data room. Private equity firms will appreciate documents that are well-written and easy to navigate. It is also essential to note any changes made after the initial upload of a document. This demonstrates that you are in control and demonstrates your commitment to be transparent throughout the entire process.

Investors often request historical and/or future financial statements. This will enable them to verify the accuracy of your numbers and also ensure that they are in line with your presentation deck. It is also an excellent idea to include in your data room the assumptions that you have used, the sources, and the reasoning behind your financial projections.

Some founders also include other documents, such as resumes of key members of the team along with employee stock agreements, as well as documentation on hiring. This gives investors a better understanding of the character of the company and the strength of its staff. Some entrepreneurs also include an analysis of the market or a growth strategy to demonstrate how their business is set to be successful.

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