If you are preparing to go out to raise funds for your startup or early stage impact business, then it is important that you are prepared by assembling a data room, sometimes referred to as a data vault, which will serve as a repository for most of your due diligence materials.
The last thing you want is to be scrambling to pull together a data room after receiving a term sheet from a prospective investor.
To start, it is important to have a secure data room that can be privately shared with prospective investors that are at a certain stage of due diligence, typically after signing a term sheet and confidentiality agreement. Nowadays, there are any number of digital storage platforms that are ideal to serve this purpose, including: DropBox, Box, GoogleDrive, or DocSend. Once, you’ve selected the platform to host your data room, then the question becomes: What to populate it with?
At The Change Agent Hub, as a baseline, we like to recommend the following three categories of documentation to populate your data room:
- Organization Documents
- Financial Documents
- Product & Market Documents
Organization Documents
Organization documents have everything to do with the legal entity for your business, and serve to confirm that your governance structures are in place, the entity is in compliance with all of its jurisdictional requirements, and that all of the historic decisions made by the company have been recorded properly. These documents include the following:
- Bylaws and Amendments
- Articles and Amendments
- Certificate of Good Standing
- Statement of Information
- IRS EIN Letter
- Company Minutes
- Board Consents
- Shareholder Consents
Financial Documents
Financial documents are just that, everything financial, which provides investors with the full picture of your financial journey to date, and projected financial information to evaluate future cash flows, use of proceeds, and capital structure. These include:
- Current and Historic Financial Statements
- Current and Historic Tax Returns
- Current and Pro Forma Cap Table
- Pro Forma Financial Model
- Insurance Policies
- Key Contracts
Product & Market Documents
The Product & Market documents section of your data room provides everything product and everything about your market. These documents should include:
- Market Research & Analysis
- Intellectual Property ,
- Business Model / Plan
- Product /Service Information
- Supply Chain Information
Assembling your data room as part of your capital readiness process, in advance of going out for funding, will have you in an optimal position to move through the fundraising process with flying colors.
Want to get prepared to raise capital successfully?
Download our Free Fundraising Checklist Here: https://thechangeagenthub.net/fundraising-checklist
Once you receive the checklist you’ll be redirected to a video walkthrough so you can use this checklist most effectively. And you’ll also be invited to check out our 9-step fundraising preparation roadmap with detailed information called Impact Incubator Immersion. This program is the exact process all our impact clients have used to raise capital successfully.
