Putting Together a Deal Room (what Should Be in Your Investor Deal Room?)

What is a Deal Room?

A Deal Room, also known as a Data Room, is a secure physical or virtual space where confidential documents can be kept and only read by people with authorized access. Businesses typically use it during significant events such as fundraising. A Deal Room aids with the due diligence process of a startup and speeds up the fundraising process.

When setting up a Deal Room, note the following;

1. Create a folder structure that is easy to navigate.
2. Allow read-only rights to prevent third parties from downloading/editing your company data.
3. Create separate deal room access for each investor so you can tailor the content to suit each investor.
4. Consult with your lawyer to guide you through the relevant legal documents your deal room should contain.
5. There are industry-specific documents your deal room should have.
6. Create an update cadence to ensure your documents are constantly updated.
7. Set up the deal room as early as possible. This could be either at the seed stage or from the day the startup becomes operational.

Items to include in your Investor Deal Room include;

Company Documents

1. Amended and restated incorporation documents
2.  Voting agreements
3. Stock purchase agreements/ Share purchase agreements
4. Capitalization table
5. Investor rights agreements
6. Any documents/details on previous raises (if any)

Board of Director documents

1. Minutes of all board meetings
2. Board consents and actions

Financials

1. Profit and loss statements
2. Pro-forma statements for the following year
3. Financial Projections

Marketing materials

1. One-pager
2. Pitch deck
3. Branding guidelines and vision

 Technology

1. System architecture diagram
2. API Documentation
3. Software licenses
4. Details on any extensive integrations
5. Product backlog export and release map
6. Screenshots of existing products

Intellectual Property

1. granted and filed patents.
2. Trademarks
3. IP Strategy

Market research

1. Market studies
2. Competitive analysis with features and pricing

Staff

1. A list of all current employees, with titles and salaries
2. Employee agreements
3. Future critical roles and hires
4. List of contract workers and firms

What you should not include;

1. Trade secrets
2. Key Company secrets

Although certain confidential documents need to be shared with investors, startups are to be wary and ensure they conduct thorough research on investors, especially if they have investments in competitors.