The large scale misunderstandings that surround virtual data rooms bely how important VDRs are becoming, not just in financial institutions but across a range of industries. There’s every chance that your organization has used, or is using, a virtual data room at some stage and it’s even more likely they’ll use one in the future.
With more data coming online every second, the importance of virtual data rooms - and thus, a greater understanding of the benefits they bring - is of vital importance. DealRoom has put together a list of the most frequently asked questions about the ‘room’ that every company of the future will have. So, let's start with definition and meaning.
A virtual data room (or as it is more frequently called, a “VDR” or "electronic data room") is a secure online space that acts as a repository of a company's documentation. Online data rooms allow users to share critical business information with clients, investors and company leadership over the internet in a controlled environment. VDRs enhance companies' due diligence processes and reduce the physical paperwork involved, reducing overhead, clutter and waste. You may also come across names such as "virtual deal room", or "dataroom" or "private virtual room" which mean the same.
Here is how virtual data room looks like.
A Virtual Data Room is essentially the next generation of data room. Data rooms were physical, walk-in rooms within companies where relevant data would be stored. Detailed logs were kept of everyone that entered the data rooms such was the sensitivity of the data stored within.
While these were a major advance on the traditional method of storing sensitive data - filing cabinets behind locked doors - they still suffered from excessive use of energy, being clunky and expensive to run. Furthermore, like much of early technology, data rooms were far from user- friendly. So, data rooms now mean cloud data storage, but depending on the chosen provider, the capabilities and features can widely vary.
One of the best parts about online virtual data rooms, is the ability to customize room structure based on your needs. Data rooms are compiled of folder and file structures that are filled with documents or files. For example, an investment banking team using a virtual data room for due diligence can set up folders for legal, IT, HR, finance, and tax files.
Once files and documents are in the room, they are in a safe environment for different team members to have access to them. And the level of access can be adjusted for various users. The data within a virtual data room is oftentimes stored in a variety of places; countries or even continents, depending on where the service provider’s data centres are located. Providers invest money in data room security to make sure clients data is in safety.
Depending on the server provider, some create multiple copies of the data and store these in disparate locations to ensure that it won’t get destroyed or be inaccessible in the event of a natural disaster. At the same time even data room provider companies don’t have access to your data, the source documents and files, same as other people outside of the room.
If you would like to dive deeper into data room structure, files and folders organization, read this article:
VDRs are considered extremely secure - hence why they are often called “secure data rooms”. More specifically, ISO 27081 certification is considered the premiere security choice for cloud storage systems. Platform’s security measures provide clients with controls, reporting, and procedures required to keep all their data and operations safe.
So, data room providers take a comprehensive, multi-faceted approach to secure online files. Several complex layers work together to create an all-encompassing barrier against potential risks and threats.
Here is a list of features of VDR which make it more secure when sharing documents and data:
A VDR is an ideal solution for any business that wants to streamline their document sharing and make it more efficient. People who have the following needs will make perfect users of VDRs:
Investing in a VDR makes sense when you don't want to tie up resources with a physical data room. Business owners, clients, suppliers, acquirers, leaders, and managers are suitable candidates for a VDR.
One of the several advantages that virtual data rooms have over their data room predecessors is that they’re on-demand. That is, you can use it for what you want, when you want. The main reason for using virtual data rooms is safe and efficient storing and sharing of documents either between employees of a company, or the employees of several different companies.
This makes the benefits of VDRs applicable to a range of industries and situations. While we typically associate their usage with the financial services sector, particularly asset management, joint ventures and mergers and acquisitions, many industries are now using virtual data rooms in their day-to-day operations for their information and data needs.
On the surface, this is a reasonable question. But in fact, there are numerous reasons why file-sharing software is inadequate when it comes to modern data needs, and not just for large organizations - even small boutique companies now usually turn to virtual data rooms, even when their data needs are relatively limited.
There’s a few reasons for this:
In the modern business environment, the only thing that unites all firms is the need for quality data. Less than 30% of Amazon’s operating income is earned from retail, while over 70% is earned through AWS - its data services. Furthermore, companies have really only begun to scratch the surface of the potential of data in business.
There are a number of purposes for which companies use data rooms including:
This means that everyone uses data rooms. Just consider some of the applications to the following industries:
A good VDR needs state-of-the-art data security. This merits a paragraph on its own. A virtual data room without security simply isn’t fit for purpose. Users have to feel absolute confidence that they can store and share confidential personal and company documents in their data room without the fear of breaches. So, this is a no-brainer.
But there are plenty of other features which won’t do a data room any harm. It’s a long list: reliability (the last thing you need are crashes), usability (attractive interface, good UX, functional for its purpose), flexibility (giving users the ability to make the data room work for their needs, works with different forms of software and allowing users frictionless ability to scale up) and mobile (you should be able to use it on the go - not just at your desktop).
Some of the popular virtual data room software vendors include:
DealRoom is the industry’s leading virtual data room and project management software that creates a better M&A experience. Data storage, diligence tracking, and communication tools are all on one integrated smart platform, which allows users to eliminate duplicate work, track progress and get insightful analytics.
Google Drive is a cloud storage platform with office collaboration tools like Spreadsheet, Word Processor and Presentation. Google Drive is a good virtual data room for startups option, especially if you are looking for a free virtual data room provider. You can get 15 GB of free space and grant different levels of permission such as viewing, editing and downloading documents. However, Google Drive does not always meet financial industry security and compliance standards.
FirmRoom is an innovative virtual data room that is easy to learn, use, and start implementing right away. FirmRoom can be used by a variety of professionals such as investment banks, private equity firms, corporate development teams, law firms, and more. Pricing starts at $250/month and includes unlimited admins and users.
Merrill offers a secure platform to meet the strategic goals of organizations. You just need 15 minutes to deploy the solution which is ready to be used out-of-the-box. You can easily upload documents using drag and drop and manage intuitive document rights. Keep in mind though that Merrill pricing structure has limitations on administrators, users, data, and projects.
ShareFile uses multi-level access permission and 256-bit SSL encryption to offer a reliable file sharing solution. It's ready for real-time collaboration and you can automate workflow like requesting approvals, collecting e-signatures and generating feedback. ShareFile does not have diligence management capabilities, so teams will still need to use Excel trackers.
Intralinks is built to leverage M&A for global banking, deal-making and capital market transactions. It comes with strong data protection, Information Rights Management, and upgraded user interface to secure your transactions. Intralinks charges per-page and has steep overage fees, so for lengthy deals with hundreds of thousands of documents, it is not the most affordable option.
SecureDocs offers unlimited storage and users at a fixed monthly charge. You can take advantage of different features such as watermarking, permission-based user roles, audit trail reporting, built-in e-signature and so on. However, as with other traditional VDRs, SecureDocs lacks diligence management capabilities.
To see more data room providers visit our data rooms overview.
If you are looking for a free data room provider read this article:
The good news is that, of the virtual data rooms we’ve listed, we believe you can’t go too far wrong by choosing any one. All are capable, user-friendly and secure data rooms which will serve most, it not all, of your requirements. It makes sense to avail of free trials with data rooms to see which one works for your needs before uploading too much data to the server, making a move to a different VDR more complicated. This will allow you to check between the subtle differences in the features, capabilities, ease of use, interface and of course, costs, involved with each individual data room.
You can check the virtual data room comparison chart and review the best on the market.
Ok, how do I find the right virtual data room provider for my needs?
Regardless of industry it’s important that companies seek out the type of VDR provider that best suits their unique needs. What many find, after careful assessment, is that those needs change over time. Commonly, companies will look for providers with specific feature sets, price points, security implementations, and usability which they can test during a free trial - offered by most providers in the industry.
There are some options how you can analyse what each data room provider offers. Here they are:
The best advice we can give you is to try each data room provider you like visually by utilizing a free trial. You can start with DealRoom free trial because it does not require any credit card to start using it.
We also suggest to read a really informative guide.
The answer to this question really depends on your company’s data storage requirements. Before looking at price, however, which can seem expensive to the uninitiated eye, let’s be clear: This isn’t normal data storage. This is storage which keeps your documents under lock and key, providing you with organization and project management tools that’s missing from the like of DropBox and Google Drive.
Having said all of that, these are the costs you’ll typically see quoted:
You can read more about virtual data room pricing in the article:
Absolutely. And we recommended it.
The virtual data room providers we mentioned above regularly allow a month-long free trial to sample what they offer. Our subjective recommendation is that DealRoom’s free one-month trial is worth considering for anybody looking to invest in a VDR. It takes less than five minutes to register and most who do end up staying to enjoy the user friendly nature of the data room experience provided.
We can write here that there are a couple of providers who offers free trials. And then write that people can go to data room free signup page and easily signup in 1 minute and check it.