In the past, we wrote about personal data rooms. Here I discussed what a personal data room is and why every one of us needs a personal data room. Now, let us look at this from a company perspective and see if companies also do need a data room.
By way of definition, we maintain that a data room is a place where you keep all important documents or information about your business, whether online or in a physical file. A company’s data room is very important especially in as far as funding, investments, mergers and acquisitions are concerned. Construction of a company’s data room is important because:
– You will have all your key documents and information in one place
– You will be able to draft and have a company pick deck more easily. By definition, a pitch deck is a brief presentation that provides investors with an overview of your business.
– When it is time to seek investments, you are not reacting to requests for information. You already have the information and data that most investor will need in order for them to make informed decisions. From my experience, it is better to deal with a prepared company, one that has proactively put their house in order, than one that put their house in order through reaction.
– Going through the process of constructing a company’s data room, a company may identify any gaps in key functional areas of their business. This way, the business can proactively address these gaps before seeking out investment. Areas one may focus on may include:
2. Financial management
3. Markets and marketing
4. Intellectual property
7. Human capital/resources.
The data room can cover the following areas as examples (The list can be longer is the items below are broken down further:)
1. Company details and background
2. Business plan, including a plan detailing the funding requirements and an investor pitch deck mentioned above
3. General corporate compliance, social responsibilities and other organisation information
4. Structure of the organisation, including shareholding and divisions or regional offices.
5. Strategy, KPIs
6. Financial management, budgets, forecasts and projections, company valuation report (You may need to keep this one close to your chest, just in case you massively your company), Latest financial reports etc
7. Marketing information such as a list of customers, customer dashboards, marketing plan, key customers by revenue, key contracts (current and pipeline), recent customer wins etc.
8. Operations and technical information
9. PR and branding
10. Growth – Funnel performance, sales and business development. Growth initiatives and KPIs
11. Risk management – risk register, risk policies, internal controls
12. Management – organisational structure, CVs of key management, Key personnel, contracts of management, managements KPIs etc
13. Material contracts
14. IP documentation – Company docs, Trademarks, Copyrights, patents etc
As you may have now seen a company’s data room allows the company seeking investment or funding to provide valuable information in a controlled and confidential manner. This because access to the data room is controlled and only awarded to people that matter. Access can also be given to all or parts of the information. A starting point would be to provide key and relevant information. Too much or too little information is not good for your prospects. Also, find a way to securely share this information, preferably via the internet and while password protected.
They are many companies that allow online data rooms. If these are too costly use your internal storage facilities, provided you can share with prospective funders.
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