Select Page

Prepare one now and increase your chances of landing a great investor

By Bernie Dixon

If you are raising capital in a seed or angel round, get ready to for a deep dive into all aspects of your company. Investors will want to know plenty of details before handing over capital. You can read about ,,What Investors Want to See in my previous blog ,,here. Today, I want to help you build your own credibility, save time, and increase your chances of success by giving you the info to prepare a data room prior to pitching to investors.

You may have heard them mentioned as data rooms, eRooms, investor desks, data vaults or other terms. They are all the same and basically are filesharing systems. They need to contain all the pieces of data and information germane to an investment transaction. You can easily create your company’s data room in commonly used Dropbox, or Google Drive. Just make sure you have the files that you want to share with investors in a separate version from your working files. You may even want to create two versions for potential investors: one with simplified information and one with more details. You can control the access. Once you have pitched and have gotten the attention of an investor, you can easily send the data room link that you want them to see as part of your follow up communications. Take it from me, you will be ahead of the game when offering the data room link to prospective investors.

With this approach, you will appear to be organized, respectful of investors’ time and most importantly, ready for the capital raise. You will save countless phone calls and email questions from investors and increase your chances of getting an investor or just as importantly, getting a solid referral to other investors.

I am going to give you a checklist of items to store in your data room. It is not a complete checklist for due diligence. You will most likely receive a detailed custom due diligence checklist from the lead investor. For your own preparation, here is a starter checklist for the basics of what you need in your data room.

9 file LaunchPad2x

,,,,,,Investor Data Room Checklist

Founding Documents and other Legal Documents

  • Articles of Incorporation including any restated and amended versions
  • Capitalization Table (the more details, the better)
  • Stock Purchase Agreements
  • Voting Agreements (with any amendments)
  • Investor Rights Agreement(s)
  • First Refusal and Co-Sale Agreements
  • Partnership, Distribution, or other Agreements governing business relationships

Intellectual Property

  • Patents filed and pending
  • Trademarks
  • IP strategy (even if you have no plans to file patents)

Board of Director Materials

  • Composition of Board and specific roles (Audit Committee Chair, etc.)
  • All Board meeting minutes
  • Board consents and actions

Pitch Deck(s)

  • Include any briefing notes, date, and location of presentations
  • Back up information and charts

Financials

  • Profit and Loss statement for past 12 months
  • Pro Forma P&L statements for next 1-2 yrs. (beyond 2 yrs. is not credible)
  • Balance Sheet
  • Loan documents and repayment plans
  • Grant documents

Term Sheet

  • Can be actual, proposed, or theoretical.
  • Share the funding mechanism (Convertible note, equity terms SAFE note)
  • Summarized general terms if you do not have a term sheet.
  • Term sheets from past raises with related legal documents

Product Documentation

  • Product descriptions
  • High-level product export or release maps
  • Screenshots of software, graphics, pictures or photos of hardware and devices
  • Future product plan
  • Pricing lists or schedules
  • Suppliers and Vendor plans, factory schedules, quality controls, etc.
  • Unique details, “special sauce,” big integrations, APIs, etc.

Market Research

  • Specific market studies
  • Analysis of competition and future projections
  • Features analytics
  • Pricing

Sales and Marketing – graphs or graphics are good here

  • Sales process plan (Direct or agent sales, distribution strategy, on-line sales, etc.)
  • Sales pipeline (build and actual)
  • Sample sales decks, brochures, flyers, ads, etc.
  • Existing customer contracts
  • Letters of Intent or other indications that potential customers will buy your product
  • Marketing plan and branding guidelines and vision
  • Social media approach, event plans with success metrics

Human Resources / Staffing

  • Complete list of payroll workers, date joined, title/role and salary
  • Future hires in priority order with the most critical first
  • List of contract workers, firms, and history
  • Contractor working agreements with fees schedules
  • Other special working arrangements

This may seem a bit overwhelming at first. It is documentation on every area of the company and is what investors want to see. By amassing these documents into a data room prior to a pitch to investors, you will save yourself aggravation and time when responding to follow-up questions. This type of preparation is another indication to investors that you are a high-quality CEO and one that seeks to minimize the risk to investors in an early capital round. This is another differentiator. So, set yourself up for success by creating your data room early. Impress investors and work confidently to nail an investment deal.

Stay tuned for next week’s blog, “13 Terms You Should Know When Negotiating with Investors” to continue in our LP2X CEO Series focused on investor readiness.

Bernie Dixon is the founder and chairman of Launchpad2X, a founder-to-CEO accelerator training organization for women entrepreneurs based in Atlanta, GA.

WP Feedback

Dive straight into the feedback!
Login below and you can start commenting using your own user instantly