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Ask HN: Safe Note and Data Room
1 point by pedalpete on Sept 10, 2022 | hide | past | favorite | 3 comments
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?



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.


I just found the below reference in the YC Library.

I'm definitely not against due diligence, and getting investors to look at our financials, but we're a tiny team, in a pre-revenue start-up. There isn't a lot to look at, and the investors should know that.

It's more a question of are these sophisticated investors? As mentioned, most investors are not asking for more than we are already providing which is our deck, exec summary, and whitepaper with details about research (we're deep tech).

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.


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.




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