In the past, companies kept sensitive documents under lock and keys because they were afraid that their sensitive files might fall into the unintentional hands of someone else. If this were to happen it could result in lost opportunities, expensive lawsuits, or even fines and data breaches.
Virtual data rooms (VDRs) are cloud-based software solutions that permit secure remote access for 24 hours a day to files and folders through any device with an internet connection. VDRs are cloud-based solutions that allow secure, 24-hour remote access to folders and files through any device with an internet connection. These platforms provide a range of collaboration tools that help in dealmaking and efficient document management. They also provide advanced features such as granular permissions, watermarking, and audit trails to minimize the chance of malicious or accidental deletion.
The most common use case for virtual data rooms is due diligence during the mergers and acquisitions. Both the sell-side and buy-side have to review a large amount of documentation, so it’s critical to have a single platform where these documents can be stored and easily accessed. VDRs streamline the due diligence process and significantly reduce the timeframes.
Startups use VDRs to collaborate with advisors and investors during fundraising rounds, M&A and other transactions. These platforms let startups upload and organize their documents into an easy-to-use index system that aids searches and speeds up the due diligence process. They also provide collaboration tools such as comments, Q&A sections and tasks to assist teams to stay organized and work more efficiently. Cloud-based models are provided by many modern vendors that don’t require any installation or hardware. Other alternatives include self-hosted software running on the servers of the startup which allows more control but does require IT resources.