A data room for investors is a central repository where documents can be shared with potential investors or financial backers. It allows rapid, easy and organized access to information without the need to send multiple versions of the same document via email. The data room is also secure, with features like watermarks and expiring links as well as password protection and the ability to grant permissions in a way that makes it easy to control access to sensitive information.
You will need to share many documents with potential financial backers. These include the essentials, such as your capitalization table, termssheet, and investment rounds, as well as more detailed due diligence documents, such as the most current financial statements (both historic and projected) as well as documents related to human resources, such as founders’ resumes or employment agreements, as well as employee stock option plans. Include documents related to technology, such as systems architecture, integrations and documentation for existing products.
The more information you include the more information, the longer it will take investors to look over. More importantly the more details you include, the greater the risk of compromising or misusing sensitive information. It is important to be able to balance the need for clarity by limiting the amount of information you provide to get your work done quickly.