Virtual Data Room Blog

In the past, companies kept sensitive documents under lock and key due to the fear that confidential files might fall into the unintentional hands of someone else. This could mean lost opportunities, expensive litigation, or even data breaches.

With the growth of digital technology, business owners began using virtual data rooms (VDR) to share their documents and information with stakeholders quickly and securely. VDRs are cloud software solutions that permit secure, 24-hour remote access of files and folders on any device that has an Internet connection. These platforms offer a variety of collaboration tools that help in deals and efficient management of documents. They also have advanced features like watermarking, granular permissions, and audit trails to minimize the risk of malicious or accidental deletion.

The most commonly used use case for virtual data rooms is due diligence during a mergers and acquisitions transaction. Both the sell-side and buy-side have to review a large amount of documentation which is why it’s essential to have a single platform where these documents can be stored and easily accessed. VDRs reduce the time required for due diligence by a significant amount.

Startups frequently use VDRs to collaborate with investors and advisors during fundraising rounds, M&A, and other transactions. These platforms allow startups to upload and organize their documentation into an easy-to-use index system that aids searches and speeds up the due diligence process. They also provide collaboration tools like commenting, Q&A sections, and task assignments to help teams stay well-organized and work more efficiently. Many of the leading providers offer a cloud-based model that does not require installation or hardware. Other alternatives include self-hosted software running on the google forms signatures servers of the startup which offers more control but could require IT resources.