Ahead of any fundraise, building a tight initial data room is key. It’s widely underappreciated how much a streamlined data package can accelerate the due diligence process. This leads us to one of the most common questions we hear:
“What do investors actually want to see in my data room?”
For the purposes of this post, we focused on the initial data room for a Series ~A company, typically provided after an introductory call or meeting. This list does not cover the broader set of materials that founders inevitably provide as they get deeper into the process.
Based on our experience reviewing thousands of data rooms over the years, we put together this short checklist:
The basic essentials:
- Pitch Deck – a clear and comprehensive pitch deck is crucial for a successful Series A round. Ensure the pitch deck is not too long, typically 12 – 24 pages. There are many great resources on what to include in a pitch deck, so we won’t attempt to cover here.
- Historical Financials – most investors want an excel file (no PDFs) so they can perform their own analysis.
- Income Statement
- Investors prefer to see a monthly P&L for at least the previous 2 years. Note: annual summaries for early-stage businesses do not provide enough detail to ascertain trends. If you provide annual only, expect an immediate follow-up request for at least quarterly detail.
- If your accounting using the cash method, we recommend at least running an accrual waterfall on the side for monthly/quarterly SaaS revenue.
- Consider your chart of accounts: revenue line items should mirror your products and services. Bonus points for basic COGS allocation of personnel.
- As for opex, ideally you will have expenses broken into functional areas (S&M, R&D, G&A, etc.). The main expense of a software business is payroll, so it’s difficult to understand a business’ expenses when payroll is lumped together in one opex line item.
- Balance sheet: investors are interested in working capital (cash, receivables and payables), and liabilities including debt and outstanding convertible notes / SAFEs. Bonus for aged payable and receivables.
- Cashflow statement (if you have it)
- Income Statement
- Pro Forma Financial Plan or financial model – preferably in excel, although google sheets also works.
- We recommend projecting out for the next ~2 years. You might start with a summary tab vs. providing the fully functioning model. Just be prepared to provide the full model as a “fast-follow”.
- The best models include realistic revenue drivers such as seller production, detailed hiring plans and basic SaaS metrics to demonstrate an understanding of the growth/efficiency tradeoffs. Check out our more detail in our forecast modeling guide.
- Cap Table – the level of detail can vary but investors are most interested in the ownership % of key investors, founders and management individually as well as funding history (amounts raised and corresponding valuations), so keep that in mind. Carta is the default these days, but other tools exist.
- Org Structure – a simple org chart conveys what the team looks like and reporting structures, and can help investors understand the talent needs of the business (we like OrgChart).
- Product Demo Video – Investors love to see your product in action. If you don’t have a demo video, sales materials are also helpful.
Optional supporting materials (include if shows well): consider any additional materials that can buttress your story. What do you want to draw attention to? Here is an incomplete list for inspiration:
- Metrics – there’s no substitute for great performance. If you have fantastic gross retention, net retention, payback period, etc., make sure they know it! Given SaaS metrics are not strictly standardized, this also gives you the opportunity to “lead the horse to water” by showing your approach to the calculations.
- Social Proof – has your business landed some blue-chip enterprise customers or channel partners? Do you have a kick ass advisory board? Do you have stellar customer testimonials, case studies and/or G2 product rankings?
- Pipeline – is your qualified pipeline busting at the seams? Be honest with yourself, it will get scrutinized, but if it’s legit then show it! Even better if you have accurate win/loss data that shows well.
- Market Research – if there are third party research reports that validate the huge the market and/or demand drivers, include them.
- Competitive Analysis and Differentiation – this will likely be summarized in your pitch deck, but you can expect further conversations around differentiation and your “moat”.
The data room is an important part of a first impression between you and your next potential partner. We hope these tips can help you make your next investor interaction that much easier.
All the Best,
The Vocap team
