Approaching prospective investors for funding during your pre-seed round can be challenging, but the more organized you are, the more straightforward the process will be. An investor data room is a powerful tool to better your odds of a quick and efficient fundraising process. Having an investor data room prepared is a sure way to speed up the process.

🛖 Why you need an investor data room

Before signing off on any investment, investors will need to do their due diligence. It’s typically the last stage before an investment is confirmed. A data room doesn’t just boost confidence by demonstrating to investors that you know what you’re doing — it should also supply important information relevant to investors’ due diligence. 

🧗🏻 Best practices for your data room

• Be concise and only provide what is necessary.

• Ensure all data is current and accurate.

• Structure the data room logically with clear labels.

🥡 What should be in your investor data room

Overview folder & documents. Having an overview folder with key information is a great way to set the tone. You can include a cover letter to help lay out the data room, your most recent pitch deck, and a term sheet.

Financials & cap table. Include your deck, basic financials (cash metrics, OpEx, etc.), projections for the following year, and your cap table. Be sure to include any happenings and commitments for the current round as well. All of these things should be easily accessible for you and should require minimal effort to get them together.

Market data & research. This section is intended to show you have a deep understanding of your market and your immediate competitors. Include any first-hand market research or public reports that are relevant to your market. Share a competitive analysis showcasing different price points and feature differences.

Incorporation documents. Confirm your entity's existence in the right structure for a technology company. Include articles of incorporation, bylaws, business certificates, and tax IDs.

Team bios. Provide detailed information about the founding team’s experience and expertise to assure investors of your team's capability to execute the business plan. Include exact titles, salaries, and job descriptions for current team members, and highlight where your next hires will be.

Draft legal agreement. Include documents like SAFEs, convertible notes, or stock purchase agreements to preempt legal review (in case you have those at hand). 

Product demo. Include videos or mockups if the product hasn't been built yet.

Partner/customer testimonials. Provide references and feedback to demonstrate customer validation and satisfaction.

Employee agreement. Show that founders have signed agreements with relevant stakeholders and are in alignment with incentives through vesting clauses.

Partnership/pilot agreements or Letters of Interest (LOIs). Display potential large customers or partnership agreements to indicate future growth opportunities.

Legal opinions/IP contracts. Include opinions on regulatory compliance and IP ownership.

🐗 What shouldn’t be included in your investor data room

As a founder, it is important to control your story during a fundraise. Certain data or documents without context can be dangerous to a raise, so it is important to keep tabs on what is in your data room. Avoid including:

• Documents that aren’t vital to investors for decision-making: Only share necessary information.

• Sensitive information or data that might require additional context: Ensure that the data shared is easily understandable.

• Documents not important to the current stage: For early meetings, share only essential information.