Raising Your Institutional Round: Chapter 8

This is the 8th chapter of my upcoming book, “Move the Needle Anyway(s): Raising Your Institutional Round.” There are a total of 16 chapters. The book is currently with the publishers, however, I wanted to start sharing the content in a form of a series of blog posts so the startup ecosystem can benefit immediately. I hope you enjoy :)

Chapter 8: Prepare The Data Room

The data room is a comprehensive set of documents that investors will review as part of their due diligence. Now, you don’t need a data room ready before you launch your fundarise process and secure your first meetings. You can create your data room as the process moves along from first meetings towards diligence—if you have a VP of Finance or a CFO, you can task them with getting these items ready. Here are the key items that should go into a startup's data room for your first institutional round: 

• Your memo and comprehensive pitch deck (we covered these items in previous chapters).

• A deck that covers your go-to-market approach in more detail, including elements such as funnel, pipeline, performing channels, key metrics, and future initiatives.

• A deck that covers your product and technology in more detail, such as descriptions, specifications, and roadmap. 

• Customer cohort analysis. 

• A FAQ document that addresses the common misperceptions or questions investors have—this can be a live document that you update as you go. 

• Financial growth forecast and operating plan in the form of a spreadsheet. 

• Historical financials (income statement, balance sheet, cash flow).

• Customer testimonials and case studies.

• Press releases and media coverage.

• Cap table and details of previous fundraising rounds. 

• Legal documents such as articles of incorporation or certificate of incorporation, shareholder agreements, any stock purchase agreements, documentation of any outstanding loans or debts, and key contracts with customers. 

There will be additional items required. However, those additional items will become clearer as you get requests for additional information from different VCs. Therefore, it is better to react to those requests than overengineer your data room right out of the gate. 

Again, I suggest performing version control of the data room by using a digital solution like DocSend. This allows you to update the data room without having to send new docs to anyone who is in process. Furthermore, when you add new documentation, others will be notified and it can help catalyze momentum in your fundraising process.