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Virtual Data Room: Everything You Need To Know

Virtual Data Room

The virtual data room industry is indeed one of the fastest-growing business sectors globally. Although virtual data rooms have been assisting businesses from the start of the 21st century, the last few years have been phenomenal in industry growth.


Have you tried online data room software for your business yet? Do you want to learn more about how virtual data rooms strengthen your data management system and streamline intra-organizational and inter-organizational collaboration? If yes, then keep reading.

What is data room software?

Data room software or electronic data rooms are highly secured, cloud-based online data storage facilities where businesses, government agencies, companies, etc., can store their confidential and routinely used business data.


Are virtual data rooms just online data repositories? No data rooms provide businesses a secure workplace equipped with multiple collaboration tools, such as workable shared documents, audio and video conferencing, webinars, etc.


Most importantly, an electronic data room automates the document management system of your business. Users can share, edit, or modify documents in real-time, and the best thing is that they can access documents stored in VDRs without an internet connection.

What type of businesses can use online data room services?

Virtual data rooms are equally useful for any type of business. As a matter of fact, VDRs are already an integral part of different business sectors all over the world, including the following ones.

1. Mergers and acquisitions

Mergers and acquisitions involve huge amounts of data exchange between all the parties involved. Virtual data rooms are particularly useful in the M&A due diligence process. Thanks to it, sellers and buyers can conveniently collaborate on one centralized platform.

2. Real estate

Real estate firms have been using electronic data rooms as data repositories and virtual collaboration platforms. They directly deal with their clients, and every single process of the deal can take place on VDRs.


3. Litigation

Law firms use virtual data rooms for various purposes. For instance, they store their private data in VDRs, collaborate with their clients, and securely share legal documents with third parties and legal teams for litigation or business purposes.

4. Healthcare

Healthcare institutions are among those organizations that have to store massive amounts of confidential patient data safely. Similarly, pharma companies use virtual data rooms to keep their confidential data, clinical findings, or secret formulae safe from external parties.

5. Private equity

Virtual data rooms are very handy for private equity firms when it comes to dealing with portfolio companies, auditors, and partners.

Apart from that, data rooms are often used in IPOs, fundraising, mining, energy, and other corporate sectors. 

Top 3 benefits of using virtual data rooms

Although an electronic data room has so much to offer to your business, here are its top 3 benefits.


1. Safe data storage and sharing

As we mentioned above, virtual data rooms are secure online data repositories where any type of business can store its confidential and general business data. Most of the high-end virtual data rooms allow you to store data in multiple file formats.

Moreover, the drag-n-drop feature makes it easier to upload multiple files simultaneously. What’s more, different virtual data room vendors support integration with Google Drive and Dropbox.


Online data room software has made data sharing simpler, quicker, and safer. A user can share any document with multiple users in encrypted form, nullifying the chances of data being intercepted by unintended recipients. What’s more, multiple users can work on a single document.

2. Seamless communication and collaboration

Virtual data rooms give your employees the freedom to communicate freely and safely. Corporate teams can arrange audio or video meetings, engage in group discussions, or communicate privately in their inboxes.

Apart from that, VDRs are effective in directly collaborating with investors and stakeholders. Depending on the scope of their power, stakeholders can participate in team meetings, access company records, add notes to the files, communicate with other stakeholders, and monitor business operations. Most importantly, they can do it from anywhere in the world.


3. Cost-saving option

Scarcity of financial resources is a common problem, especially in startups and small businesses. Is it wise to invest in virtual data rooms in such circumstances? The short answer is yes.

For starters, virtual data rooms minimize the paper cost, printing costs, and stationery expenses to a great extent. Moreover, they provide a virtual workspace where employees can work from home. So, a business in its early days can save office rent costs by allowing its employees to collaborate on the company’s virtual data room.

Virtual data room comparison with traditional data rooms

We can compare virtual data rooms with orthodox options, and VDRs will win this battle by a fair margin. Here’s why.

Physical data roomElectronic data room
Burdensome paper and printing costOn-premise access to documents during business hours.Not suitable for time-sensitive activities such as due diligenceHigh risk of data loss or theftMinimum or no paper cost24/7 access to documents, both online and offFast and efficient due diligence processMinimum data theft risks with backups and protection features

Final words

The world is moving to digitalization, and virtual data rooms certainly hold the key to corporate success in the future. They are reliable, safe, easy to use, easy to set up, time-saving, cost-effective, and whatnot. Therefore, not using VDRs for your business’s data management system can be a decision you may regret in the future.


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