HACKER Q&A
📣 pedalpete

Safe Note and Data Room


A few years ago I raised a seed round for my first start-up, and it was pretty simple, and pretty quick. We didn't raise much. The investors saw the product, the deck, had a call with us, and that was pretty much it.

I'm now raising a seed round for a new company. A few investors have asked for access to the Data Room, which I haven't set-up, one asked for an "Investor Memorandum", and other such things.

In our previous company, we were only raising $350k, we now have a hardware company and are raising $2M.

Is it common to have a Data Room and other supporting documents when raising your first Safe Note? Is it a function of the amount we are currently raising? Or is it a sign of the types of investors we are speaking with? I know one of them has not done very many investments, and is very quite green.

To be clear, most investors are not asking for a Data Room, it's only a few, so I'm just trying to understand what is special about these investors?

Do I need to change my expectations, or watch out for something with the investor?

When did you set-up your first Data Room?


  👤 jschveibinz Accepted Answer ✓
I would find it very strange for investors to not conduct a formal due diligence on any size of investment. A “data room” is just a convenient way to not have to continue sending the same docs over and over again when you have a number of different investors.

So yes, you should expect to provide all of the information about your team, your business history and your financials to your investors.


👤 pedalpete
Apparently, I can't edit my comment after a period of time, but I just found this comment in the YC library

https://www.ycombinator.com/library/4A-a-guide-to-seed-fundr...

> Do not spend too much time developing diligence documents for a seed round. If an investor is asking for too much due diligence or financials, they are almost certainly someone to avoid. You will probably want an executive summary and a slide deck you can walk investors through and, potentially, leave behind so VCs can show to other partners.