The term sheet is not the finish line. Between signed term sheet and wired funds sits due diligence, and diligence kills more rounds than valuation ever will. The kill is almost never dramatic. It is a slow bleed of confidence: missing contracts, an unassigned IP file, a founder handshake that was never papered, a customer concentration nobody flagged. Each finding pushes the close by a week. Enough weeks and the market moves and the deal quietly dies.
The founders who close on time build the data room before the term sheet, not after. Here is the room, folder by folder.
A clean data room has six top-level folders in this order. Any order will work; this one matches the order most VC associates open them: 1. Corporate & Legal 2. Financials 3. Intellectual Property 4. Product & Technology 5. Commercial & Customer 6. People & HR
Everything else — cap table, prior financings, board minutes — lives inside these six. 1. Corporate & Legal
The point of this folder is to prove the company exists, is properly owned, and is not sitting on any latent liability.
Cap table, fully diluted, as an editable spreadsheet — not a screenshot. Include options granted, exercised, and available in the pool.
All prior financing documents. SAFEs, convertible notes, priced round docs, side letters. Every single one. A missing SAFE surfaces in diligence and rewrites the cap table.
Stockholder consents and board minutes for every action taken since formation. If board minutes were never kept, ratify them now.
Good standing certificates from the state of incorporation and every state you operate in.
Any prior litigation, threatened litigation, or regulatory action. Disclose. Investors find out anyway, and finding it themselves is a trust-killer.
The trap: founders skip old SAFEs from friends and family because "they are tiny." They are not tiny in diligence. Every instrument that could ever convert to stock belongs in this folder. 2. Financials
The goal here is not to prove the numbers are impressive. It…
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