Virtual Data Room Blog

In the past, companies kept sensitive documents in a locked and key, fearing that their confidential files might fall into the in the wrong hands. If this were to happen it could lead to losing opportunities, costly lawsuits, or even fines and data breaches.

With the rise of digital technology, business owners began using virtual data rooms (VDR) to share documents and information with stakeholders quickly and securely. VDRs are cloud-based solutions which allow secure, 24/7 remote access to files and folders from any device connected to an internet connection. These platforms provide a range of collaboration tools that facilitate dealmaking and document management. They also include advanced features such as watermarking, granular permissions, and audit trails to limit the risk of malicious or accidental deletion.

Due diligence is the most popular use of virtual data rooms during mergers and acquisitions transactions. Both sides have to review a large amount of documentation and it’s crucial to be able to access a single platform from which the documents can be kept and easily reviewed. VDRs can cut down the time needed for due diligence by significant amounts.

Startups typically use VDRs in order to collaborate with advisors and investors during fundraising rounds, M&A, and other transactions. These platforms allow startups to upload and organize their documents into an easy-to-use index system that facilitates searches and speeds up the due diligence process. They also have collaboration tools such as comments, Q&A sections, and tasks to assist teams to stay organized and more efficient. Cloud-based models are offered by many modern vendors that do not require any hardware or installation. Other options include self-hosted software, which is installed on the servers of the startup, which allows more control but may require IT resources.