The Ultimate Guide to Data Rooms for Pre-Seed Fundraising

Let’s face it, the words “data room” don’t exactly make your heart race. But in the world of fundraising, data rooms are like the unsung heroes of the process, working behind the scenes to save the day while ensuring every document is where it should be. When you’re preparing for an investment round, a well-organised data room will not only impress your stakeholders but also save you from those 3 a.m. “Where’s that file?!” crises.

Let’s break it down into something you can relate to (and maybe even enjoy).

What is a data room, and why does it matter?

Imagine hosting a dinner party, but instead of fine wine and canapés, you are presenting legal agreements, financial statements, and intellectual property filings. The data room is your venue: a secure, meticulously arranged space for your “guests” (investors, auditors, or buyers). Much like an exceptional host, your goal is to ensure that they leave impressed.

Data rooms are essential because they:

1. Boost Transparency: They demonstrate that you have nothing to hide.
2. Save Time: No more frantic, last-minute searches for crucial documents.
3. Appear Professional: A well-organised data room sends a message of competence and preparedness—qualities that investors value.

Essential components for a pre-seed data room

To make a strong impression, ensure your data room contains the following:

1. Overview Folder: Includes pitch decks, cap tables, FAQs, and SEIS/EIS advance assurance details.
2. Governance Folder: Contains articles of association, shareholder agreements, and board meeting minutes.
3. Financials Folder: Features financial statements, tax filings, and budget forecasts.
4. Market & Commercialisation: Includes customer contracts, competitor analysis, and evidence of customer engagement (e.g., reviews or feedback).
5. Technology & Intellectual Property: Houses patent filings, domain ownership documentation, and experimental data.
6. Regulatory & Compliance: Contains permits, licences, and environmental reports, especially for regulated industries.

Securing and managing access

Virtual Data Rooms enable you to assign varying levels of access based on user roles. Protecting the confidentiality of your data is paramount. Here are some access management tips:

• Entry-Level Access: Share general documents such as the pitch deck & term sheet with all interested parties.
• Full Access: Provide all sensitive and confidential files, including cap tables, board minutes, and legal agreements, only to committed investors.

FounderCatalyst’s Intelligent Data Room helps you securely manage and share key investment documents. It consists of seven main folders:

1. Entry Level

Your “Entry level” folder comprises two key elements:

• your initial term sheet; and
• your fundraising supporting documentation.

You will find your initial term sheet in your entry level folder, once you have completed the first stage of your journey on our platform and entered both your company information and details about your funding round. The term sheet summarises the basic terms and conditions you are offering to potential investors in exchange for their money, but this ‘initial’ version does not contain a capitalisation table (“cap table”). Don’t worry, once you have decided which investors you want to take through to the enhanced level and the agreed terms, a full term sheet incorporating a cap-table is produced for you. The term sheet is in a format that your investors will expect to see, containing all of the relevant information.

You should also use this folder to upload and manage any company information/documentation in support of your round. This should include, as a minimum, your pitch deck, business plan and a three-year financial model. You also have the option of creating sub-folders to create a more enhanced structure, which could include sub-headings like” financial”, “contracts”, “competitive information” and “market data”, amongst others. You can create as few or as many as you like.

For investors to access your entry level folder, you must give them permission by sending an invite via the platform. Before an investor downloads your documents, they must sign a non-disclosure agreement and a disclaimer as part of their registration and onboarding process.

2. Investment documentation

This folder contains all of the documents and forms that are produced for you within the FounderCatalyst platform - documents such as the Subscription and Shareholders Agreement (SSA) and Articles of Association (AoA). These documents will be identical for all of your investors.

You cannot upload any supporting documents to this folder.

For investors to access folders 2, 3, 4, 5 and 6 listed below, they will require enhanced, as opposed to entry level, access. Again, only you can give them enhanced level access, by sending an invite via the platform, once they have signed the term sheet and have committed to invest.

3. Investor specific

This folder contains a copy of all the documents for each individual investor, detailing their name, address, the amount they are investing and their proposed shareholding details.

You will be able to view the documents relating to every investor; each investor will only be able to see the documents that relate specifically to itself.

You cannot upload any documents to this folder.

4. Disclosed items

This folder allows you to upload any information that you may wish to share with/disclose to your chosen investors as part of your warranty and disclosure process. Again, you have the option of creating sub-folders, to create a more enhanced file structure.

This folder can contain more sensitive information, such as anonymised employee and salary details, details of future plans and any other important information you decide will support your round.

For a more detailed explanation, please see our blog Demystifying the warranty and disclosure process.

5. Undisclosed items

You can upload any content to this folder that you want to share with all investors. Unlike the previous folder however, items in this folder are not considered 'disclosed' for the purpose of your warranty and disclosure process.

You also have the option of creating sub-folders, to create a more enhanced file structure.

6. Agreed form documents

Documents in the “agreed form” are a standard requirement in early stage investments and are generally required by your investors as a pre-condition to investing.

The agreed form documents relevant to your transaction are:

• your latest year-end accounts (the “Accounts”), if you have any;
• your “Business Plan”, if any; and
• your “Management Accounts”; again, if any.

These documents are defined in clause 1 of your Subscription and Shareholders Agreement. They are referred to throughout that document and it’s vital that everyone agrees which are the definitive versions. By putting the final versions into your “Agreed form documents” folder, this should eliminate the risk of any confusion.

Again, you have the option of creating sub-folders, to create a more enhanced file structure.

7. Fund documentation

This folders just stores the Fund Term Sheet. This special form of Term Sheet will only be made available to individuals invited to your company in the role 'fund'. You can safely ignore this folder if you haven't invited someone with this role.

Intelligent data Room Index Sheet

The Intelligent Data Room index sheet lists all of the documents inside your Intelligent Data Room in excel format, similar to an index inside a book or a site map. You can use this index to locate any information or files. It can be an incredibly useful management tool for you.

Red flags and investor interaction

Managing investor interactions requires care, especially when sharing your data room. Watch for red flags such as:

• Excessive Requests: Investors asking for too many documents or multiple follow-ups may lack genuine interest. Set boundaries and request a full list of requirements upfront.
• Inconsistent Information: Ensure your data room aligns with materials like pitch decks to avoid raising doubts.

For customer references, minimise disruptions by delaying introductions until investors show full commitment or providing pre-recorded testimonials. Thoughtful management maintains professionalism and protects your time.

Maintaining your data room

A data room is not a one-time effort. As your company evolves, so should your data room. Regularly update it with fresh financials, newly signed agreements, and the latest board resolutions. Keeping everything current signals to investors that you are organised and proactive.

Key tips include:

• Refresh Financials: Ensure that your financial data reflects your latest performance, especially during a prolonged fundraising period.
• Update Agreements: Keep signed contracts, board resolutions, and shareholder agreements current.
• Ensure Consistency: Verify that all documents align with other materials, such as your pitch deck, to avoid raising red flags.
• Avoid Visible Dates: Refrain from including file creation dates in document titles, as outdated timestamps could inadvertently raise doubts about your company’s progress.

Prepare for questions

Investors will scrutinise every aspect of your business, from your intellectual property (IP) strategy to your growth potential. Anticipate their questions and ensure you have the necessary documents to substantiate your claims. A well-prepared data room will reinforce your professionalism and help you appear as the capable leader investors are looking for.

Using data rooms beyond fundraising

Data rooms are valuable beyond fundraising, such as:

• Strategic Partnerships: Partners or vendors may need access to tax forms, agreements, or operational details. A secure, organised data room simplifies collaboration.
• Acquisitions: Acquirers require extensive legal, financial, and operational documentation. A well-maintained data room ensures smooth, detailed scrutiny.

The essential data room checklist

To ensure your data room is flawless:

• Are all legal agreements signed and uploaded?
• Is financial data accurate and complete?
• Have documents been logically categorised?
• Is intellectual property documentation comprehensive?
• Have access controls been tested for security?

Pro tips for standing out

1. Add Personality: Introduce a personal touch, such as a brief note in the pitch deck. A little personality can engage stakeholders and make your data room memorable.
2. Highlight Strengths: Showcase unique assets like patents or exceptional sales pipelines that make investors want to be involved.
3. Highlight Key Metrics: Provide a dashboard or summary featuring critical metrics such as revenue growth, customer acquisition costs, or lifetime value. Use charts and graphs to make the data easier to interpret.

Conclusion

Think of your data room as the CV of your company—clean, comprehensive, and confidence-inspiring. A well-maintained data room not only simplifies the due diligence process but also positions you as a capable, forward-thinking entrepreneur. While creating and managing a data room may seem tedious, it is an investment that pays dividends by enhancing your credibility and securing deals.

By ensuring that every file is in its proper place, you can approach investors and stakeholders with confidence, knowing that your data room reflects your professionalism and vision.