Raising your Series B or C can be daunting. It's crucial to treat the fundraising process with the same level of execution you use to manage your day-to-day operations.
Investors'll look at your data room (and the process that went into making it) as a direct measure of leadership effectiveness. 75% of venture capital firms are projected to adopt AI-enhanced Virtual Data Rooms (VDRs) by 2025, transforming how investors evaluate startups.
With that in mind, I'd like to offer this actionable, concise checklist on how founders and operators can prepare a winning Series B and C data room.
What is an Investment Data Room?
An investment data room is a secure, centralized repository for storing and sharing confidential business information. This is especially crucial for fundraising as it organizes all pertinent documents, financials and data so investors can efficiently evaluate your business.
When should I put together an investor data room?
The market for Series B & C fundraising today requires companies to be well-prepared, flexible, and strategic in their approach. You'll need to align your business goals with a clear fundraising timeline.
In this market, you'll want to start the fundraising process with at least 9–12 months of operating runway.
It'll give you the necessary time to prepare all internal materials, find the right investors, and negotiate favorable terms.
Why does your startup need an investor data room?
If your data room's well-structured, it'll help speed up the due diligence process. That extra time can be spent building relationships with investors or focusing on running your business. Startups spending 40+ hours on due diligence preparation achieve 7.1X returns versus just 1.1X returns for those spending under 20 hours.
If your data room's well-structured, it'll help speed up the due diligence process. That extra time can be spent building relationships with investors or focusing on running your business.
A data room can give your fundraising process enough momentum right from the start by:
Helping you get a head start on the process: The initial version of your data room should address most of an investor's preliminary questions about your business.
Sends a strong positive signal to investors: Investors can see your data room as an extension of how you manage your business.
Now that you know why your startup needs an investor data room, let's look at the key documents you'll want to include.
Key Documents to Include in an Investment Data Room
Financial Metrics
While your company’s Series A round may've been light on metrics and hinged on your Pitch Deck, growth-stage investors'll focus heavily on both financial and operational metrics.
Investors will review your financial statements to evaluate your business fundamentals, growth, and operating margins. Be sure to include the following in your data room:
Historical financials: Include your three financial statements (Profit and Loss, Balance Sheet, Cash Flow) with performance for at least the last two years, broken down by quarter.
Financial forecast: Include quarterly projections for your P&L and your ARR waterfall for the next three years.
Some questions investors might ask after reviewing your financial metrics and forecast include:
How are you recognizing revenue?
What are the underlying components of COGS?
Why is there a difference between your ARR and GAAP revenue growth?
Operational Metrics
Many companies've managed to scale quickly but at the cost of high customer acquisition expenses. However, we're no longer in a “growth at all costs” environment where inefficient growth was overlooked. Today's investors want to see operational efficiencies across your business. Prepare your:
Historical and forecasted operational metrics: Include the performance of the last two years and your forecast for the next three years for key metrics (ARR, growth rate, NDR, average ACV, magic number, CAC payback, etc.).
Raw customer MRR data: Provide a blind list of customer data with contract start date, initial MRR, current MRR, and segment identifiers (e.g., geography, market segment).
Overall churn data and insights: Customers may churn for many reasons (e.g., poor product fit or going out of business).
Customer pipeline and current marketing/sales funnels: The forecasted new revenue growth you're presenting is driven by your current pipeline and historical funnel performance.
Some questions investors might ask after reviewing your operational metrics include:
How did you establish the assumptions used to forecast your operational metrics?
What's your plan for scaling S&M spend?
Sales and Marketing
Investors want to understand your GTM motion and the playbook behind it. If you're raising a growth round, you need to show strong product-market fit.
This means you have a chance to present:
Outbound sales, marketing, and channel partnership playbooks: Growth-stage investors expect you to have a proven GTM motion.
Brand messaging and archetypes: Show off your brand vision and marketing positioning.
Some questions investors might ask after reviewing your sales and marketing approach include:
What's your hiring plan for both Sales and Marketing?
What's the historical attainment of your sales reps?
How long does it take to ramp a new sales rep?
What's your sales pipeline coverage to hit forecasted targets?
Product
Startups are often product-centric, so investors want to know what you're building and how you'll keep innovating post-funding. There are many ways to discuss your product in the data room, but your goal is to ensure investors clearly understand what it does today and where it's headed.
Use the following guidelines for this section of your data room:
Roadmap: Provide a clear view of your current and planned features, along with the customer segments they serve.
User engagement and product metrics: Investors want to see how often users return to your product.
Company
Before a Series B or C, investors want to see a clear path to profitability and market leadership. Talent is often a leading indicator of success. They'll look for a management team that knows the market and can attract top talent before and after funding.
Demonstrate this by including:
Management structure: Offer a breakdown of your top leadership.
Team organizational structure: Show a snapshot of your current structure and how you'll expand post-funding.
Culture compass and company presentation: Provide an overview of your mission, vision, and values.
Market data and research
This section demonstrates your understanding of the market, key competitors, and the strategic advantages that'll help you emerge as a leader. It's your chance to show both the qualitative and quantitative sides of your market.
Consider including:
Your market sizing: Market sizing reflects the maximum revenue potential your business could achieve.
Pricing mapping versus competition: Pricing is crucial for profitability and margin control.
Customer references: During due diligence, investors'll want to talk to your customers.
Strategy
This may be the most critical part of your data room. Investors want to see a clear post-funding strategy, ambitious goals, and a cohesive vision of your future. Focus on short- and long-term plans that align with your company's trajectory.
Deep dive into your current growth initiatives.
Growth initiatives overview from B to C round.
Legal and Financial
In this section, investors expect to find all the necessary information for proper due diligence. Make sure these details are easily accessible to keep the process moving swiftly:
Corporate records and charter documents
Cap table
Intellectual property
Security issuances and agreements
Board updates and minutes
Legal disputes (past and present)
What Not to Include
While building out your data room, exclude outdated financial statements, irrelevant internal memos, or duplicate materials that don't support your fundraising narrative. Keep every document relevant, accurate, and aligned with your company narrative.
Building your Series B & C data room with Abacum
The complexity of managing a fast-growing company and consistently delivering against growth plans and performance metrics is not an easy feat. Raising a Series B & C round is not any different, with the goal being able to accelerate business momentum. To achieve this, you should take a data-driven and confident approach to preparing your data room.
Abacum is the FP&A automation platform that acts as a central hub for founders, finance teams, operators, and investors to build the data room behind any successful fundraising round.
At Abacum, we've seen firsthand through our customers that behind any successful growth-stage round lies a consistent track record of 12+ months of operational execution.
Abacum's approach to automation and performance management makes it the solution of choice for companies preparing for the Series B & C.
With Abacum, companies can:
Connect operational and financial data sources: Easily drive real-time reporting of your financial and operational metrics in one place.
Manage processes and ensure accountability with structured workflows: Ask stakeholders to provide context about their data (for example, narrative reports).
Deliver faster insights to seize every opportunity: Focus on building trust with investors by delivering a personalized data room and controlling access.
Organize and share all documents in a centralized system: Create dedicated spaces within Abacum for each data room section.
Conclusion
Making sure you have a robust, well-structured investment data room is an essential step in securing the funds your company needs. By anticipating investor questions and presenting accurate, compelling data, your Series B & C rounds can proceed with
