Virtual Data Room Blog

In the past, businesses kept sensitive documents under lock and key in fear that their private files might fall into the unintentional hands of someone else. This could result in lost opportunities, costly litigation or even data breaches.

With the rise of digital technology, business owners began using virtual data rooms (VDR) to share their documents and data with their employees quickly and securely. VDRs are cloud-based software options that enable secure, 24/7 remote access to folders and files via any device with an internet connection. These platforms offer a variety of collaboration tools for effective deals and efficient management of documents. These platforms also come with advanced features, such as the ability to grant granular permissions and audit trails, which reduce the risk of accidental deletion or malicious intent.

The most common use case for virtual data rooms is due diligence during the mergers and acquisitions. Both the sell-side and buy-side must review extensive documentation as a result, and it’s vital to be able to access a single platform from which documents can be stored and easily accessed. VDRs simplify the process of due diligence, significantly reducing timelines.

Startups utilize VDRs to collaborate with advisors and investors on fundraising rounds, M&A and other transactions. These platforms let startups upload and organize their documents into an intuitive system which helps anchor speed up the due diligence process. These platforms also offer tools for collaboration such as commenting, Q&A areas, and task assignments for teams to work more efficiently. Cloud-based models are provided by a number of modern vendors that do not require any hardware or installation. Other options include self-hosted software installed on the server of the startup, which offers more control however it may require IT resources.