The Basics: Keeping Your Data Room Tidy and Complete

As soon as you sign any agreement on behalf of your company, it's time to start a data room.

A data room?

Once upon a time, if a company was sold, the acquiring company would need access to documents as part of the due diligence process. The documents would be stored in a physically secure continually monitored room, normally in the vendor’s offices (or those of their lawyers). Advisers and lawyers from the acquiring company would visit to see the documents they'd need.

How does this relate to startups?

If a startup raises money from a VC, the VC will need to do some due diligence. The due diligence will require access to key company documents. These documents are stored in a data room.

In my experience, a data room where VCs and startups are concerned is a secured online storage location. It could be Dropbox or something similar.

The data room will contain important documents relating to the company.

If you are a startup and have ambitions to either raise money or sell the company (= most startups), at some point in the future you will need a data room.

Due diligence can be distracting and a lot of work. I know this having been in companies raising money from VCs.

The earlier you start a data room, the easier it is to maintain one. The better maintained your data room is, the faster and less painful the due diligence is.

Think of it this way. If due diligence lasts only 1 month versus 3 months, the difference between the two is 2 months less cash runway needed. If due diligence takes longer because you're scrapping around to put your documents in order, your disorganisation is costing you valuable runway.

Even more of a concern is if you've lost important documents such as big customer contracts. To avoid losing important documents you need to get organised.

A basic data room checklist

Here's the obvious things to file.

  • All employee contracts past and present
  • All intern contracts past and present
  • All consultant contracts past and present
  • List of current employees, job titles and salaries
  • Office lease
  • Any patents applied for or granted
  • Partnership agreements
  • Customer contracts
  • Asset register
  • Management accounts
  • Audited accounts
  • Board minutes
  • Board packs
  • Certificate of incorporation
  • Articles of association
  • Shareholders agreement
  • Share option agreement
  • Share option grants
  • Software licence details
  • List of any open source software used
  • Upto date cap table
  • Domain name ownership
  • Any legal disputes, past and present - all relevant documentation

You may get asked for more than this but most investors will need to see the above. If you can keep the above data updated at all times, that's a great start.


  1. Someone in the team must own adminstration of the data room. If the founder doesn't do it themselves, they need to entrust it to one person to administer but check on the status on a regular basis.

  2. Everyone in the team needs to understand that all contracts need to go to this one person as soon as they are signed. It's so easy to do deals that don't get filed centrally. Two years later finding the contract can be like finding a needle in a haystack. It's useful to having a standing agenda item in a weekly management meeting: what contracts have we; entered into, terminated, currently negotiating.

  3. The data room itself can be a file sharing service. Make sure you back it up and that the security is tight with strict access controls.

  4. Use a folder structure that is simple to navigate. At the root level, keep an index file showing the contents of the data room.

  5. Where relevant, keep paper copies of contracts filed and in a locked cabinet. Always keep digital copies of every paper contract as well.

If you are not persuaded, think of it this way. When you come to raise your money or sell your company, you are selling what's in the data room. Your data room in many ways IS your company.

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