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  • Yannick Oswald

Getting Ready. The Dataroom.

Updated: Mar 10

March has just started, and with it, the first of the two busy 'deal-making' periods of the year. The second one is usually from the end of September to November. This post will look at what documents and data are needed to be ready. Putting these together is often a complex exercise, as you have to compile all the many things going on into just a few key documents... Still, it's got to be done - here's how.



The approach. Perfect your game.

We need to prepare before you get into serious investor discussions. Do not stumble into it when cash needs become pressing, and you need to make a deal quickly. Instead, let's get ready ahead of time, delegate, and clear the founders' plate for prime time.


What does that mean? We are engaging with and are investing in companies throughout the year. To be honest, I actually enjoy getting to know companies better during the summer months when things are a bit less busy overall, and my competitors are off... More time just means better conversations and better relationship building... As I mentioned in my post 'the right mindset for raising venture money': 'many top-performing founders know something that many others do not: When meeting with VCs, they don’t just fixate on getting their money - They make sure to ask the right questions and learn from each other. Don't be transactional, but leave room for questions. Know what insights you are looking for.' Engage with VCs continuously in a coordinated way, a long time before trying to get a 'deal', to perfect your game: build relationships, build your investor pipeline (see below), improve your story, and get your data room in order. Here are some thoughts on the business expectations at each fundraising stage.


When to strike? It is clear that at Christmas time and during the August summer break, things are moving slower in general - fewer deals/transactions are being made. Not only on the investor side, of course, but in the world in general. Many people are taking a break (as should founders, by the way...). For example, it is tough to close clients towards the end of December and during August. As a result, B2B SaaS companies often prefer to close a deal with an investor in Q2 vs. Q1 as it is easier to approach clients, show more robust traction, and get a better deal. Good investors know this, of course, and will take these cycles into account when evaluating businesses. So, don't be surprised - you might get an offer outside of the 'deal-making' periods 😃🙌. At the end of the day, one is always fundraising...


Step 1. Investor pipeline spreadsheet.

I encourage founders to build out a comprehensive investor pipeline spreadsheet as a first step in running an effective process. Before you hit the deal-making trail, leverage your spare time to research the most relevant investors for your company. This takes time, triangulating sources of information, and tapping into the investor networks. Here is a good template for the pipeline spreadsheet, put together by my friend Jenny.



Step 2. What you need to strike a deal.

Before you go out to convince investors to back your business, you should have three things ready, or at least a solid draft of it.

(1) Of course, you need a DECK or memo. Here and here are some thoughts on how to build a deck and what to focus on. Dropbox, Notion, Google Docs, Docsend, Intralink, etc… are all good document-sharing solutions for distributing your deck. Intralink and Docsend let you track the engagement of investors, which can help. Investors are used to all solutions, so just stick to what works best for you. Besides making the deck, I invite you to think early on about the '3 questions you must answer'...


(2) You need a COMMUNICATIONS PLAN to build MOMENTUM. This is crucial. One of the most effective ways to stay top of mind is to come up regularly with exciting news. But beware: it is challenging... Fundraising discussions might take some time. And this news and its timing are not always under your control as some are driven by third parties such as big client wins, great PR, etc. Therefore I push our companies to plan ahead as much as possible and think of various ways to stay 'hot'. Alternatives can be exciting product breakthroughs, the sharing of client testimonials, general market dynamics, etc.


(3) Finally, you need a DATA ROOM with the relevant documents that investors might ask for. Like the deck, the data room is an evolving set of elements. Why should you prepare this ahead? It is simple: to gain time. All founders agree: Raising capital can be a tedious and unpredictable process. At the same time, you need to manage a fast-growing business. Preparing your documents in advance is the most efficient way to gain precious time.


Step 3. The Data Room.

There is so much going on; what on earth should I put in this data room? Here is an overview of the five elements you need by fundraising stage.



(1) The core of your data room is the deck, of course... You will use this master deck for intros, pitching, leave-behinds, and everything else.

(2) One layer down you have the 'key story elements.' These are the most important insights and data points into your business. It is a set of sub-documents that explain in more detail key elements of your business and address core areas of the due diligence. These story elements are there, so investors don't misunderstand your data or skim over it. It is dangerous to just drop investors into spreadsheets and hope they make sense of them. Story element examples are: a cohort analysis (super critical), go-to-market strategy, product roadmap, business plan overview, market/competition map, org structure overview. You can again use slides, but Word (think Amazon memos, for example) and Excel formats (e.g. for cohorts) might be easier for some topics. Make it convenient for investors to copy/paste, as much of this information will be used to communicate internally within VC firms.

(3) Two levels down, you will have all the detailed underlying data. One example is the detailed business plan, with a deep dive on every line of your P&L and business KPIs. Often this is presented in the form of one master document / a big excel. At the earlier stages, many investors do not require this as there are too many unknowns. It just doesn't add much to the due diligence. Another example is a detailed market map, not just with your competitors but ecosystem players that live around you: core tech providers, partner companies, channel partners, potential acquirers. This may save your prospective investors huge amounts of time.

(4) Three layers down, you have the legal/financial/accounting information. You usually only need to share this after term-sheet / during deal execution. Otherwise, you're just data dumping too early.

(5) At the bottom, you have useful bonus material such as market intelligence. These can be articles or social media posts on your industry and the trend(s) you are after.

Finally, we need to remember that data rooms are where processes go to die. The 'fundraising game' key is to engage in conversation, understand questions and objections, provide answers specific to these and meaningfully move the process to a close with every interaction. If you already have investors, I suggest you put them in the loop and get feedback on your data and the process in general. Not only should they know potential investors that might be interested in your adventure, but they should also give you feedback on your data room and the process in general. Good luck!



This is a picture I took in Kiev in the summer of 2018. I visited some brilliant entrepreneurs who were so nice to show me around and help discover the local tech ecosystem. My heart is with all the Ukrainians, their families, and friends. In these bitter times, it is great to see so many international tech companies take on responsibility and offer strong support, especially to their local workforce. I invite everyone to help. Here is an initiative I like.


Life is awesome,

Yannick



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