Learn More About Virtual Data Room Software
What is Virtual Data Room Software?
Virtual data rooms (VDRs), also known as online data rooms, help businesses securely store and share sensitive company information in a safe, online repository. This can either take the form of a secure website or secure web application that is set up through a proprietary extranet. Businesses and clients can virtually meet within the room and examine the sensitive documents they have been given access to in order to make a business deal, discuss legal information, or simply review the documents as they see fit. Sensitive information typically includes private company documents, sensitive client, tax, legal or financial information, intellectual property, or any other important document that requires extra security to ensure its confidentiality.
VDRs are ideal for companies that require a high level of safeguarding of certain documents but are also made easily accessible to those that are authorized to handle and share them. Before the introduction of VDRs, physical data rooms were the norm and helped facilitate safe and secure document access and sharing. However, since VDRs proved to be safer, more convenient, and less expensive than traditional physical data rooms due to their increased security measures and lower upfront costs, they have largely replaced the latter over time.
What are the top secure data room providers for due diligence?
Some of the top secure data room providers for due diligence include Datasite, Ideals, and Firmex. These platforms offer efficient due diligence processes in M&A, finance, legal, and other sensitive transactions. Here is a more detailed look at some of the top providers:
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Datasite: Known for its detailed due diligence platform. Datasite integrates with document management, security, and collaboration tools, making it one of the top choices on this list for due diligence.
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ideals: Recognized for its robust security protocols and user-friendly interface, fit for businesses of all sizes.
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Firmex: A straightforward and secure data room provider for due diligence that emphasizes its ease of use and customer support.
What are the Common Features of Virtual Data Room Software?
File sharing: VDRs streamline collaboration by providing user-to-user file sharing that is granular and restrictive to ensure the utmost security. However, authorized users that have the right to view certain documents can access them easily and safely within the VDR.
Security and encryption: One of the main features of a VDR is access control and the ability to grant document permissions to specific users to maintain a secure setting. Files are kept safe and secure with encryption, two-factor authentication, as well as single sign-on controls. Additionally, watermarks and remote shredding add another layer of security.
Viewer history: Authorized users have the ability to track how long someone spent on a certain document, where clicks were made on the document, and where else a viewer has navigated within the secure VDR.
Optical character recognition (OCR): With OCR, users can use full-text search terms to easily locate a word or phrase in a document.
Live chat: Live chat features encourage collaboration and conversation about specific documents, which is especially helpful for users that are collaborating with other users remotely.
View-only access: For added data security measures, users can adjust who has the power to edit documents within the VDR. Those who should not have the power to edit a document, and instead should only have the power to view it, can be assigned view-only access, which restricts editing.
Reporting: The reporting feature gives metrics and insights into page views, user account view history, and recent searches.
Drag-and-drop file upload: Users can easily upload documents into a VDR by simply dragging and dropping files and folders from their desktop into a designated folder that’s stored in the VDR.
Bulk upload: Users can upload more than one file at once to speed up the upload process in the VDR.
What are the Benefits of Virtual Data Room Software?
VDRs go a long way to ensure the secure sharing of data and other confidential information, but these products also provide secondary operational benefits to other parts of the business.
Transparency and building trust: Building strong relationships with stakeholders is vital for successful business interactions, and at the heart of this is transparency which helps to build trust. In situations where transparency of highly confidential information is integral, VDRs provide a way for information to be shared without the risk of data leaks.
Cost efficiency: The use of VDRs hugely cuts the need for physical documents, which in turn reduces the costs associated with printing, filing, and storing documents. A large cost that is reduced or often completely eliminated with VDRs is traveling for the sole purpose of viewing corporate documents. VDRs also have fees, however, these can be predictable and thus manageable. All of this reduction in paper files and travel also reduces a company’s carbon footprint, which is another added benefit of VDRs.
Increased productivity: VDRs allow for more streamlined workflows. During a time-sensitive transaction, such as an M&A process, VDRs can help to greatly reduce time spent on communication and administrative tasks. Further, the file organization functionality of VDRs makes the searching and referencing of documents efficient.
Global accessibility: With an increasing amount of business transactions happening with partners around the world, VDRs reduce the geographical limitations that once made the process of negotiating and communicating across borders extremely laborious.
Who Uses Virtual Data Room Software?
VDRs are important for industries that require safe and accessible storage and sharing of documents. Some businesses might compare the pros and cons of choosing between a VDR and a file storage and sharing software. While VDRs provide some of the same features a file storage and sharing solution, they offer much higher security measures and are essential for industries that require strong safety measures for their files. On the flip side, unless heavy security measures are needed, VDRs prove to be inefficient and cumbersome due to the restrictions and authorizations involved. A simple file storage and sharing system would suit businesses that don’t need to comply with stringent security regulations.
Nonprofit organizations: Any nonprofit that requires the storage and sharing of sensitive fundraising documents, grants, and other financial documents, and association lists have a use case for VDR software.
Mergers and acquisitions (M&As): VDRs are essential during the due diligence phase of an M&A because M&As require the legal disclosure of all relevant documents and information pertaining to the companies involved in the acquisition process. During the due diligence phase of an M&A transaction, both involved parties can leverage the stable and secure environment that VDRs provide in order to share relevant documents in real time.
Board communications: In many cases, board members often require the exchange of sensitive or proprietary documents. VDRs provide a safe platform on which board members can easily communicate and share important board documents.
Initial public offerings (IPOs): IPOs can be a cumbersome process that a virtualized workspace can make more efficient. IPOs require businesses to be more transparent with their activities and transactions than they may be used to. VDRs can help those businesses navigate juggling their public-facing responsibilities with any internal compliance duties. VDRs can easily add new authorizations to current and prospective shareholders while keeping document security a priority.
What are the top secure data room solutions for mergers and acquisitions?
When conducting mergers and acquisitions (M&A), these are some of the top secure data room solutions based on G2 user reviews:
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Datasite: specializes in M&A processes and due diligence with the focus on speed and efficiency. This app offers real-time analytics and extensive Q&A management tools.
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Intralinks: provides a fast and smart cloud storage solution, offering AI-powered due diligence tools and real-time analytics for dealmakers.
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Ansarada: Known for its user-friendly interface that focuses on improving deal workflows.
Which secure data room service is best for investment banks?
For investment banks managing high-stakes transactions like M&As, capital raising, and IPOs, choosing a data room service that offers robust security features is important. Some of the top contenders include:
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Datasite: A leading virtual data room (VDR), particularly strong in facilitating M&A transactions and capital market deals, offering strong security and advanced analytics.
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DealRoom: Often used for investment banking for its speed, security, and confidential information management.
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FirmRoom: Offers ease of use and scalability; this app caters to both mid-market and enterprise deals.
What are the Alternatives to Virtual Data Room Software?
Alternatives to VDR software can replace this type of software, either partially or completely:
RFP software: Requests for proposals (RFPs) are often done through standalone RFP software. However, some businesses may choose a VDR solution to hold materials related to the proposal, adding a layer of security.
Enterprise content management (ECM) software: ECM systems help companies organize, manage, and distribute unstructured documents, often utilizing cloud storage capabilities to do so. This solution is less secure but more accessible for businesses that don’t require such heavy document management security.
Knowledge management software: Company assets stored within knowledge management software can be easily populated, edited, stored, and shared within the system. Like VDR software, knowledge management software provides an online repository of documents for businesses. These solutions are considered a viable option for businesses that don’t need the heavy document security that is provided by VDRs. Documents stored within knowledge management solutions are typically meant for assets related to job notes, how-to guides, and other related informational guides useful for employees.
Challenges with Virtual Data Room Software
Authorization issues: While security is the main benefit of VDRs, it can often lead to authorization and access issues. Users that have the ability to assign authorization will have the responsibility of ensuring all parties that require access to a specific document or set of documents gain accurate authorization. Users that do not have access to a product but are entitled to authorization may end up confused and frustrated, especially if they require the document for a time-sensitive reason.
Which virtual data room services are best-reviewed for startups?
Startups need virtual data room (VDR) platforms that offer secure document sharing, fast setup, and intuitive controls to support fundraising, due diligence, and investor relations. Based on G2 reviews, these VDR tools are top-rated:
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Datasite Diligence Virtual Data Room: Tailored for high-stakes transactions, Datasite offers advanced security, document redaction, and analytics, making it ideal for startups navigating M&A or investment rounds.
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Ideals Virtual Data Room: Designed with simplicity and speed in mind, Ideals provides startups with a fast onboarding experience, granular permission controls, and real-time file tracking.
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Ansarada: Combines AI-driven insights with a clean user interface, helping early-stage companies manage investor access, document versioning, and deal readiness from day one.
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Firmex Virtual Data Room: Offers a reliable, secure, and straightforward platform for startups handling sensitive documents, with intuitive navigation and responsive support for fast-moving deals.
Who are the leading providers of virtual data room software for small businesses?
When confidentiality matters but resources are limited, small businesses turn to VDRs that are easy to manage and built for speed. G2 users highlight these top performers:
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Clinked: Combines file sharing, secure messaging, and white-label branding in a client-focused VDR solution, perfect for small businesses collaborating with external partners or clients.
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DocSend: Popular among startups and SMBs, DocSend allows real-time tracking of shared documents and investor decks, with access controls that ensure only the right people can view sensitive content.
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SecureDocs: Provides robust permission management and audit trails in a clean, easy-to-use interface, designed for small businesses needing a dependable solution for due diligence or internal sharing.
Which Companies Should Buy Virtual Data Room Software?
Any business that creates and shares sensitive, proprietary, or client information will benefit from VDRs. However, some industries require the software more than others. Financial institutions benefit greatly from VDRs' security features, as they facilitate safe document sharing while also preventing cybersecurity risks, which are unfortunately commonplace in the industry. Additionally, any industry that faces identity theft risks, sensitive data leaks, or sensitive legal information would benefit from VDRs because of the complex security measures it offers.
Venture capital, private equity, or investment banking firms: These firms use VDRs in their due diligence processes, which includes securely sharing portfolio information, financial information, and tax documents.
Legal firms: Lawyers and other legal professionals can more easily share confidential legal documents between clients and authorized third parties in VDRs than they can in a standard file and storage sharing system.
Real estate companies: Real estate companies also deal with due diligence situations, so VDRs are a major asset for the industry. Situations such as property exchanges, appraisals, and the process of selling a home involve confidential document sharing between several parties.
Biotech or pharmaceutical companies: These companies often have to share intellectual property and clinical trial data with third parties.
Mining and energy: These companies are routinely sharing large, confidential files for various purposes such as joint ventures, environmental audits, financing, mid management, etc. VDRs make it easy to navigate these regulatory processes.
Which data room providers are best for large Fortune 500 companies?
For large Fortune 500 companies, the best data room providers are Datasite, Intralinks, and Box, due to their reliability, scalability, and security features. Here's a more detailed summary of these choices:
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Datasite: Specializing in M&A transactions, Datasite offers detailed analytics, project management tools, multilingual support, and enterprise-grade security that caters to global enterprises.
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Intralinks: With a global presence, this platform offers secure collaboration and workflow automation, secure document management, and advanced security.
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Box: Known for its broad user base, it offers secure document sharing, advanced security, an intuitive interface, and strong customer support.
These data room providers are one of the best choices for large organizations with high-volume transactions and enterprise-grade security.
How to Buy Virtual Data Room Software
Requirements Gathering (RFI/RFP) for Virtual Data Room Software
Choosing a VDR may seem straightforward, given its very clear purpose as a place to securely share confidential data and classified information. However, because of the risks associated with a VDR not operating in a way that best fits an organization’s needs, it’s important to ensure buyers consider a few factors before selecting one. Here are some factors to consider:
Size and amount of files: Consider what types of files will be uploaded onto the VDR. Will it only be internal files? Will it also be client files? Will it be large data sets? Depending on these answers, buyers should choose a VDR that supports the file types and sizes that they will be working with.
Security levels: Depending on the level of security needed to protect the files, various protections are available. It is easy to select a security level that is above what is actually needed, however, this is advised against because intense security means lack of visibility and accessibility, even for files that don’t need to be so protected, leading to clients, employees, or both getting frustrated.
Customization: When selecting a VDR, it’s important to consider the different use cases relevant to the business. If the buyer is going to be using a VDR for internal use, for clients, for prospects, etc., then they should make sure they are easily able to change settings to allow for different file types and security levels. If teams that don't have a technical background will be using the data room, it's important to consider ease of use and select a product that is user friendly and intuitive.
Compare Virtual Data Room Software Products
Create a long list
There is an extensive amount of options when it comes to VDR software. Once buyers understand their requirements, they should search for solutions by browsing the internet. Most product websites will have a ‘Features’ page that will provide a high-level picture of what the software encompasses. G2.com is a good place to start.
Create a short list
Next, buyers should research further into the long list of solutions to create a short list. There is lots of research (articles and videos) that explain and review different products from different perspectives. Buyers should find research that caters to their industry. G2.com’s ‘Compare’ feature will help to stack software up side by side to compare specific features and learn how real users rate them.
Conduct demos
Demos are a great way to get a firsthand look at potential solutions and the ability to ask the right questions to determine which product is right for the organization. Buyers should prepare for each demo by having a standard list of questions and clarifications to ask each vendor.
Selection of Virtual Data Room Software
Choose a selection team
Given the IT and security focus of VDRs, members of an organization’s IT department should be included in the conversations. They will help to assess the compatibility of certain products with existing systems that will need to be integrated with the chosen VDR. Further, there should be members of the teams that will be using the VDR frequently. This often includes teams that deal with highly sensitive information, such as finance and R&D. Members of all the various teams need to collaborate when selecting the right product.
Negotiation
At this stage, it is important to discuss pricing and ask if any discounts are available, whether it be for purchasing a larger number of licenses or for a longer duration. Buyers should explore payment options, implementation, customer support, and onboarding services at this time as well.
Final decision
Now that buyers know which software solution they want to purchase, they should ask for a trial run of the product to test how it will be implemented and adopted by their teams. If it is well integrated with existing technology and the teams receive it well, the buyer can be confident that they are purchasing the best VDR for their needs.
What Does Virtual Data Room Software Cost?
The cost of a VDR depends on the features it offers, the amount of storage available, the number of users, and more. Here are the most common types of cost structures when purchasing a VDR:
Per page cost model: This refers to a cost model that will charge per page that is stored in a VDR. This type of pricing may be attractive for small projects with a clear scope.
Per-user cost model: This type of cost model provides a set number of user licenses and the organization will be charged for each additional user. It’s important to check how many user licenses are needed before signing up for this model.
Storage size: Some VDR providers will charge based on the number of gigabytes (GB) the room uses. Some VDR providers will allow for a certain amount of data storage, or a range, and will charge for overage.
Flat monthly fee: These plans are like mobile plans, offering a set amount of data, pages, and users, and are priced accordingly. This cost model is a good way to avoid large overage fees.
Virtual Data Room Software Trends
Multidevice availability: VDRs are efficient, but accessibility can always be improved due to its intense security measures. Trends are pointing toward multi-device accessibility to alleviate some common accessibility issues. While some VDR solutions are just starting to offer access via multiple devices such as mobile and browser, it’s expected that mobile access will be a more commonly available feature as VDRs become increasingly popular across more industries. Multidevice availability is ideal for corporate deals and transactions that are ongoing, time sensitive, and require immediate action.
