A data room is an encrypted virtual space that allows businesses to store confidential information about high-risk transactions. These include mergers and acquisitions (M&A), initial public offerings (IPO) and fundraising rounds. The data rooms allow authorized individuals — which includes investors and due diligence teams to review and evaluate sensitive information without sharing the original data files.

To make it easier for potential buyers to view and understand your data, design a clear folder structure and clearly label documents in the data room. This makes it easy for buyers to find the information they require to make an informed decision. It also helps keep your information organized and prevents potential mistakes.

Some startups divide their investor data rooms into various sets of documentation according to the stage at which they are in the process. If you are seeking to raise your initial round of funding You may want to hold back certain information until an investor has confirmed their willingness to invest.

While it’s tempting to share as much data as possible, remember that the data you provide will be used to build your narrative. That narrative will vary depending on the stage of your business, but it must always include the key forces that drive your current success. For instance, a young startup might concentrate on the latest market trends or official source regulatory changes and your team, whereas a growth-stage company might highlight customer references, revenue growth and product expansions.