Businesses kept confidential documents secured in the fear that they would get into the hands the right people. If this happens it could result in lost opportunities, expensive lawsuits, or even data breaches and fines.

With the growth of digital technology, business owners began using virtual data rooms (VDR) to share information and documents with stakeholders quickly and securely. VDRs are cloud-based solutions that provide secure, 24 hours a day remote access of files and folders from any device with an internet connection. These platforms provide a range of collaboration tools to aid in dealmaking and management of documents. They also provide advanced features such as watermarking, granular access, and audit trails to minimize the chance of malicious or accidental deletion.

Due diligence is the most popular application of virtual data rooms in mergers and acquisitions. It is essential to have a platform that allows both the sell-side as well as the buy-side to easily examine and archive documents. VDRs simplify the process of due diligence and significantly reduce the timeframes.

Startups use VDRs to collaborate with advisors and investors on fundraising rounds, M&A and other transactions. These platforms allow startups to upload and organize their documents into an intuitive indexing system that eases searches and speeds the due diligence process. They also have collaboration tools such as commenting, Q&A sections and tasks that assist teams to stay organized and more efficient. A majority of modern vendors offer a cloud-based model that does not require installation or hardware. Other options include self-hosted software that is installed on the server of the startup, which allows more control but may require IT resources.

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