For the reasons of cost, efficiency, and security — and due to the global pandemic — virtual data rooms have spread widely across different industries.
Virtual data room is a high-security online repository of documents available for granular distribution.
Furthermore, data room is a software that allows companies to store, manage and share their corporate documents online. This tool protects sensitive information from data leaks and provides businesses with all the features required for making work with documents easy. Companies use this software for all data-related processes such as M&A.
Unlike its predecessor, the data room as a physical space, a virtual dataroom doesn’t require its visitors to share the same physical location. However, it preserves the behavioral pattern: just like in the offline world, the owner of a digital data room shares access to selected visitors.
Data Room Selection Assistant
How many projects do you need to include to data room?
For which deal types do you choose a data room?
Where your data room should be hosted?
Do you need product demo presentation?
Do you need to have access to data room 24/7 (including weekend and holidays)
Do you need to have multiple people access documents at the same time?
Before setup, you need to choose a data room provider that suits your company best. We created this site specifically to make the process of providers’ comparison easier: we analyze VDR providers according to different criteria to give you the whole picture. You can get acquainted with the method we use for the detailed comparison below.
Once you’ve chosen a provider, you need to
adjust your processes to follow a new flow: prepare the documents for uploading
to the data room; create a list of participants to share documents with; build
the process of updating the documents and remove access timely.
In general, to effectively start working with
VDR, you need to follow a simple algorithm of actions and avoid several
● Select a VDR provider ● Get a fixed price from the VDR vendor and access to support ● Prepare all the documents needed for uploading to the VDR ● Share access with appropriate users ● Constantly update the documents in the room, as well as shared permissions
● Uploading documents that are not ready for it (they are unassigned, outdated, etc.) ● Failing to upload strategic documents (board minutes, patent docs, etc.)
How to choose the best data room provider
When choosing among online data room, it is worth paying attention to five features and functions that make the best data rooms suitable and effective for your business.
1. Data Room Provider needs to be secure
The first and foremost is the VDR’s quality. When choosing data room service providers, pay attention to what technologies they use to ensure secure loading and transferring of documents, user access protocols, encryption for data transfer between users, etc.
You can use protocols for selecting a VDR company like GDPR and HIPAA; Advanced Encryption Standard, 256-bit encryption, dynamic watermarking, multi-factor authentication, intervals of expiration, and a set of firewalls.
2. VDR needs to be easy to use for storing, sharing and control
The user interface is important. It should be simple enough so that users with any technical background could quickly grasp the basics. The best virtual data rooms must use modern web technologies for the interface to work without any delays and lags. And, of course, the best data rooms interface must adapt to the needs of the business, at least in terms of color branding of the main sections and adding the company’s logo.
3. VDR data room needs to have a top-level CS
Although the interface of a modern digital data room should be simple enough to be dealt with without the help of a support team, there are still situations when support is needed. And to check the quality of the support service, its friendliness, and customer focus, the best way is to use VDR during a free trial period and ask the support team a few questions.
4. VDR needs to be customisable and set for collaboration
It’s important to know how much a VDR can be tailored to your needs. You will employ it to share your documents with counterparties, which means you need to make sure that the VDR can be customized not only at the level of the logo and corporate colors, but also at the level of directory layout and invites received by the users you invite.
5. Data rooms and terms needs to be transparent
Regardless of the pricing model that the data room uses, the pricing should be transparent. This means that you as a user will be able to understand what functions are included in your package, how much it costs to use these functions and how much you will pay if the use of the dataroom by your company increases or reduces any time, without looking into the contract or to the pricing page in the interface.
Advantages of data rooms
Online data rooms have many advantages, but
users usually highlight five of them (we have arranged them in a descending
This is the most critical issue for every
company considering the use of virtual data room services. Security should be ensured
at several levels: data storage and backup, fine-tuning of access for different
users or user groups to different documents, multi-level user authorization,
secure transfer protocols from user to user over the network, data protection
using watermarks, etc.
File upload speed and interface responsiveness provide a flawless user experience and speed up all work processes in a company that uses such a product for working with documents.
This feature of the electronic data room works in two directions. On the one hand, secure data room services should ensure uninterrupted work with files, regardless of which device the user is trying to access them from, be it a desktop, tablet, iOS, or Android smartphone. On the other hand, a similar level of accessibility should be provided for the data room software administrator, who should be able to change access settings both in office mode and on-the-go.
Following the COVID-19 outbreak, more teams
choose to continue working from home due to social distancing requirements.
This pattern must be tackled in the technology boost of VDR, where
collaborative activities are vital: notifications ensure that each party gets
all updates and end-users are capable of performing familiar activities with
documents (edit, add suggestions, comments, etc.). All these features make
collaboration sessions more efficient and let them run regardless of the
location of team members.
For the modern VDR users, it is not enough to
allow or deny access for different users or user groups after documents have
been uploaded. The system must provide admins with insights on the particular
documents being watched or edited by collaborators.
Who uses virtual data rooms?
Initially, VDRs were used mostly by legal
companies and all sorts of banks for convenient and secure operations with
documents during due diligence in mergers and acquisitions (M&A). However,
since any company that operates in the market works with a significant number
of sensitive documents, the use of virtual data room solutions has gone far
beyond the legal and banking sectors (see the section on those who use VDRs).
Today a VDR is used by different companies in different ways: to work with investors, for bankruptcy proceedings, to store internal company’s data, etc. A VDR is an excellent solution for M&A, due diligence, corporate document sharing, IPOs, real estate deals, biotechnological licensing, litigation, clinical studies, investment banking, etc.
Here are some of the most popular use cases:
Use case 1: M&A deals
This is the most popular use of virtual data rooms. Sellers need to share significant volumes of confidential information as part of the deal and due diligence process. Data room services become a one-stop-shop for sellers, bidders and buyers to exchange, review, and comment documents. It’s worth mentioning that it helps reduce paper waste, which makes the process not only eco-friendlier but also cheaper since the involved sides do not need to print paper documents and pay for delivery.
Use case 2: Court proceedings
All court proceedings parties, e.g. attorneys,
regulators, etc., access confidential documents remotely with zero risks that
the documents will be stolen. If the matter requires the involvement of
international teams working on the same case, they can access all required
documents from a single hub of VDR.
Use case 3: Initial Public Offering (IPO)
Due to the variety of sides involved in IPO
(company employees, investment bankers, attorneys, etc.) and the amount of
paperwork required for signing and verification, it is crucial to avoid
unwanted access, copying, printing, and editing of the documents.
Use case 4: Sharing of any sensitive documents
As much as in M&A deals, data room vendors are used for storing and sharing documents enjoying an additional level of security. That is why this solution has gained popularity in the following industries:
Life science projects
About virtual data room pricing
Many options define a VDR’s pricing: the amount
of storage needed, number of workspaces, administrators or users, document
management and collaboration tools, level of document security, customization,
onboarding, and customer support.
The price of a data room depends on the provider
and can be:
when a client pays for the volume of data used;
when a client pays for users;
a client pays for the set of features collected in a package;
flat, when a
client pays a fixed price and gets a full list of features;
when a client pays for the features it uses.
The most popular virtual data room pricing models used by providers are tiered, per-user, and per-feature. Each of the approaches has its pros and cons, therefore, when choosing a VDR provider, first of all, pay attention to what it focuses on when developing a product (usually this can be tracked by the provider’s marketing materials): on the features or value that the product provides to its users (think of 64 Gb of memory vs. a thousand songs in your pocket).
And, no matter what pricing model you choose, most players in the market have a free trial that allows you to test the virtual data room software before paying to use it.
Virtual data room review and comparison
On our site, you can find an independent review of virtual data room providers, data room m&a and choose the vendor that fits your business needs.
We analyzed all providers and selected those
that meet several crucial criteria. When we were compiling the rating (the
virtual data room review and rating data is regularly updated), we were taking
into account not only the number of features that are presented in a particular
product but also the user experience that we learn about in personal interviews
with users and from virtual data room reviews and comments on our website and
on third-party resources. We use a five-point scale to rate providers for each
category. Also, we indicate the difference between the scoring rating of
different providers so that the strengths and weaknesses of all data rooms are
We regularly analyze information on the Internet to provide you with the latest data on virtual data room comparison and help you find the best data room.
Also, we have prepared pages with a comparison of different characteristics of data rooms: we carefully analyzed the offer of each of the providers, their functions, combined all the points, and got the final rating, which can be seen when going to the comparison pages. For comparison, we take into account several factors such as files & folders management, file protection & digital rights management, data hosting & infrastructure security, accessibility & ease of use, customization, support & services, etc.
Managing and limiting access to stored documentation is a must in today’s world affected by a growing number of cyberattacks. A virtual data room is a feasible option to do that as it lets the company store and share valuable information with pre-approved users in a controlled manner.
What’s more, a it is compliant with all formats and sizes of documents, which makes it a worthy option for companies of any size and industry — from tech startups to food startups, to online stores and marketplaces, to large corporations.
It is a particularly good option for distributed teams which have become a new reality all over the world, especially in such areas as software development, marketing and sales, legal affairs, etc. With virtual data rooms, regardless of your current location, you can access and change stored data any time (it goes without saying that it is necessary to obtain permission to do that first).
Imagine a team the members of which work from London, New York, Tokyo and Melbourne to launch a well-thought-out media campaign. Not only they live in different cities, but they also live in completely different time zones, which makes even online communication a bit tiresome and inefficient, to say the least. Would you want to wake up at 3 am just to have a business call even with people you like?
What adds insult to injury, this team has a tight deadline they can’t miss. What’s more, their campaign is being prepared in secret as it’s their chance to outrun their closest competition and finally grab that market share, which they committed to do at a quarterly meeting.
A virtual data room is the right option for this team as it secures and arranges data and makes it possible to work with it from anywhere anytime. In addition to that, its interface is simple and pleasant.
All of this begs for a question, though: what types of data do you exactly store in a data room? Are there any restrictions? What shouldn’t you store in a VDR? Are there any guidelines?
What documents should be kept in a data room?
We have grouped the documents that can be stored in the VDR into several categories that have to do with a variety of business areas and activities:
Basic corporate documents are documents that play an essential role throughout the company’s existence.
Capital stock and other securities are documents reflecting the number of common and preferred shares that the company is authorized to issue.
Financial and tax matters are documents like audited and unaudited financial statements, monthly/quarterly financials, etc.
Property and assets stand for documents on the owned and leased real property, related property amendments/consents, etc.
Intellectual property are legal documents proving the intellectual property ownership or rights.
Material agreements are any agreements which have a material effect on the business or assets.
Customers, sales, and marketing have to do with product campaigns and launches (summary), list of customers and key metric information, form of sales agreement, and accounts receivable summary reports.
Suppliers and manufacturers section includes documents for all key suppliers and manufacturers, signed agreements, etc.
Customer and product support documents are onboarding docs, retention flow description, satisfaction surveys, etc.
Regulatory matters are permits, notices and other relevant regulations.
Litigation/disputes are documents related to any litigation, arbitration, or governmental complaints, fillings or actions.
Insurance stands for documents with all insurance and liability policies and claims.
HR/employees/consultants/contractors have to do with current employees, future hires, contractors, etc.
Press and PR holds a directory of press releases, media articles, press kits, and independent reviews which a PR team uses to ensure the right brand perception of the company.
Related party transactions is a set of documents on a pre-existing connection of parties before the current transactions.
It goes without saying that it is not necessary to store all the documents from this list in a secure data room. Every company adapts the list to its own needs and reality by eliminating or adding something to it. This list may also vary depending on the company’s size and industry.
What documents should not be stored in a data room?
Even though VDRs are completely secure, some documents should not be stored there for a number of different reasons. Mostly since the data is just too sensitive and simply should be accessible to just a limited number of employees.
But how do you define which data sets are just too sensitive? It’s true that you will hardly find universal rules or laws that could apply to all cases — there’s no such thing as a “one-size-fits-all” library of rules that should be followed to the letter by everyone. There are always exceptions and possible changes, which is a good thing.
Yet, we suggest that there are two types of data sets that should not be uploaded to any kind of cloud storage:
source code of digital products.
“Not everyone is ready to pay for data to be stored but some companies need to use reliable and secure cloud storage for keeping corporate data. For those businesses, we’ve created our website”.
How do I create a virtual data room?
Before you start using data rooms, you should:
Find a provider that is trusted. Review sites and recommendations from VDR client companies will help to make the right choice.
The next move is to create groups and invite users. These actions do not take long. Administrators can manage the platform by deleting or organizing groups.
Further, with the access level settings, you allow or restrict viewing, downloading, original downloading, editing.
The final step is uploading files and folders to workspaces. The bulk upload and Drag’n’Drop tools simplify the process.
How does a virtual data room work?
The platform serves as a repository and tool for paperwork. The developers took the needs of today’s business as a basis.
Built-in security mechanisms ensure the safety of every file and user. Companies exchange data without the risk of hacking and breaches. Functions available to administrators enable workflow management and analytics.
For employees, VDR is the ability to complete tasks faster. It is possible through the use of automated processes.
What is in a data room?
Clients store all their data in virtual workspaces. Since providers guarantee protection, companies have no fear. Files and folders contain:
The things above are in an organized order and easy to find.
The platform supports all formats so you can upload video, audio, presentations, and others.
Some developers place templates in data rooms to make it easier and faster to create documents.
Users and guests should review the built-in nondisclosure agreement. By agreeing to its terms, the platform visitors take responsibility for their actions.
What is a data room in M&A?
A merger and acquisition transaction involves the preparation and study of a large volume of documents. In this case, virtual workspaces contribute to the deal-making without delays. Both parties get:
space for cooperation,
safe information exchange,
source of sensible solutions.
The tool can make a partnership between buyer and seller possible even from a distance without risking security. To do this, the provider implements encryption, electronic signature, watermarks.
This method is cheaper than using physical storage. No travel resources are required to review the data.
What is a data room for investors?
Before investment companies are ready to cooperate, they need to study a large number of documents. In this way, they assess the risks and potential opportunities from the investments made. As a rule, the parties agree on a list of data that will become the subject of a detailed examination.
Virtual data rooms are a convenient format for investors. Regardless of the time of day, their location, devices, access to information is open on the platform.
What is a secure data room?
A data room is a private virtual workspace that must be safe. It is where companies can store sensitive information. To ensure security, potential users first make sure protection features are available. For example, these are encryption, access control, compliance with international standards, and others. Quality providers apply virus scanning. This program prevents breaches and leaks.
High-quality portals are all about:
safe collaboration with partners.
The goals that clients pursue when buying VDR need not only security but also high performance. That is why the platform should be easy to use.
How much does a virtual data room cost?
Service prices differ. Cost may vary depending on the contract length, feature set, availability of technical support, etc.
Before entering into cooperation with the provider, it is necessary to consider this issue. Sometimes organizations have to pay extra to invite more users or get gigabytes.
Most service companies offer a free trial. Users can check if this tool is appropriate for meeting their challenges.
Often the cost is changed because of the customer’s requirements. In that case, the developers customize it. Then the parties discuss the tariff.