As a VC, I often ask startups to share a data room. Surprisingly, few startups have one at the start of fundraising, and even fewer have a data room that is complete, structured, and ready for diligence. So, without further ado, let’s dive into the importance of having a data room.
WTF is a Data Room?
If you are new to fundraising, you might be asked to share your data room during a call with a VC. And then it strikes you – you have already sent them a deck and some financials. Wasn’t that enough? What’s a data room and why do they need it in the first place?
A data room or a virtual data room (VDR), is a single, shared space that contains the core materials investors typically request during due diligence. It could be a Google Drive folder, Notion, a dedicated tool (e.g., Visible), or any other way of sharing files. The key is not the platform – it’s the structure, completeness, and ease of navigation.
It usually contains several folders, such as General Info, Financials, Team, Product, Market/Competition, and Legal. For deep tech founders, it’s often the case that they also share their research papers and scientific activity.
A Data Room Helps You Close Your Investment Round
Many startups don’t prepare materials in advance. But VCs will ask for them anyway – often at inconvenient times. Having a data room ready:
- Speeds up the process. You can share a link instead of digging through email threads and resending files. Especially, when you talk to multiple investors and don’t remember what you have already shared with who.
- Signals execution and seriousness. A clean data room is a reflection of how well the company operates.
- Keeps one source of truth. Fundraising can take months (often longer in deep tech). Having a data room gives you ownership over documents – you can update it anytime. Otherwise, your outdated 6-month-old pitch deck might keep circulating.
- Helps with investor referrals. Investors share dealflow. Even if one fund passes, a well-prepared data room can help you get introduced to another investor faster.
Things to Include in Your Data Room
1. Pitch Deck
This is your fundamental, go-to document when fundraising. Personally, I prefer simple PDFs over DocSend links or Loom videos. For tips, I highly recommend another post about 10 Slides You Need in Your Deeptech Startup Pitch Deck.
2. Cap Table
Even if it’s just two founders owning 100%, still include it in your data room. Also include SAFEs/CLAs (if they haven’t converted yet), and an ESOP (existing or planned). Make it easy to understand ownership today and post-money.
3. Financials
Financial model, forecasts, use of funds, burn, runway, key metrics (MRR, CAC/LTV, unit economics, etc.). It may vary depending on your stage, but I think this part is self-explanatory. If you’re a pre-revenue deep tech startup, clarity of assumptions matters most.
4. Team
List all your employees and their time commitment (full-time/part-time), roles/org chart, bios, future hiring plans, who gets ESOP. Are all the competencies in the company? Who are the key employees?
5. Product
Share your product demos and roadmap. Tell us what’s already done, and what’s ahead – milestones, integrations, features. Include a technical overview, architecture, and infrastructure description.
6. Market
Competitive landscape, market overview, go-to-market strategy. Basically, it should prove you have done your research and know your market inside-out.
7. Traction
Case studies, past pilots, customer feedback, sales pipeline, LoIs, contracts with existing customers. Anything to prove product-market fit and your ability to sell.
8. Legal
IP information, NDAs, investment agreements, shareholders agreement. For university spin-offs: clearly document who owns what and what is licensed.
9. Scientific Activity
If you are a deep tech, scientific-driven startup or a university spin-off, sharing your research papers in the specific domain can help validate you as a top-tier expert. It will also speed up technical due diligence. Disclose any information about grants and public funding.
Best Practices and Common Mistakes
If you are thinking about fundraising – don’t wait until a VC asks you for data room access, prepare it upfront. For me, it’s always a clear sign that I’m dealing with a good founding team.
A few rules of thumb:
- Be transparent, but don’t overshare.
- Control access to your data room and track who opens it.
- Don’t share sensitive or confidential information.
- Keep it updated, simple, and easy to navigate.
Your data room is a reflection of your readiness to fundraise – and your operational discipline.