Beginner’s Guide to Virtual Data Rooms: Setup, Features, and Best Practices
The presence of virtual data rooms is deep-rooted in modern-day businesses. Entrepreneurs often opt for cost-effective business solutions, such as data room software, and industry giants are also rapidly adopting technology and online data management methods.
The international digital data room market is already a three-billion-dollar industry and is expected to reach the $13 billion figure by 2032. In fact, almost everyone working in any business sphere must have at least heard about online data room software, if not used it.
What exactly is dataroom software? Why are businesses rapidly shifting to this technology? How does an electronic data room transform your business? Who can use it? The following guide provides detailed answers to all these questions. Let’s start with the introduction to VDRs.
What is a Data Room?
A virtual data room is a cloud-based digital database where you can store, organize, distribute, share, and manage your confidential or routinely used business or private documents. Data rooms give you the option to open, edit, preview, annotate, and share documents without needing any external software.
In addition to data management, modern-day data room services also come with futuristic communication tools for inter- and intra-organisational communication. Any standard data room solution typically includes chat messengers, audio/video calling tools, voting tools, Q&A modules, live polls, and more.
What are Online Data Rooms Mostly Used for?
Data rooms have multiple applications in various types of transactions, including M&A deals. Here are some other common use cases of online data room software.
● Capital or fundraising
● Load syndication
● Strategic partnerships
● Joint ventures
● Corporate consolidations
● M&A prospecting
● Project bidding
● Initial public offerings (IPOs)
● Data sharing
● Data storing
● Investment portfolio management
● Asset management
● Risk management
● Real estate transactions
● Litigation
Who can use Virtual Data Room Software?
Virtual data rooms are not industry-specific solutions. Millions of professionals and businesses use data rooms for the purposes mentioned above. Here are some top consumers of VDRs.
● Financial Industry (insurance companies, investment banks, private equity firms, credit card companies, etc.)
● Oil & Energy sector
● Life sciences (hospitals, pharmaceutical companies, government healthcare organisations, etc.)
● Law firms and attorneys
● Corporate sector
● Small businesses
● It firms
● R&D companies
● Real estate sector
Important Digital Data Room Features
High-end data room services usually come with these features.
| Data Protection and Hosting | Collaboration | Document Management | Deployment and Integrations |
| · Multi-factor authorization· Data encryption· Granular access permissions· Customizable watermarks· View-only access· Remote document shredding· ISO/IEC 27001:2013 Certified· HIPAA certified· GDPR compliant· 99.9% uptime· Audit logs | · Q&A modules· Secure user massager· Annotations and comments· Files and folders notes· Discussion boards | · Drag-and-drop and bulk upload· Multi-format support· File labels· Automatic index numbering· Full-text search (OCR)· Windows Explorer integration | · Third-party app integration· Browser support· Mobile devices support· Operating system support |
How has Dataroom Software Transformed Businesses?
Digital data rooms have made business collaboration and data management safer and more efficient. Here is how data rooms did it.
1- Faster and Remote Access to Business Data
About 10-15 years ago, a large number of businesses used paper documentation systems. It was almost impossible to access business data from anywhere, anytime. Besides, email service providers allowed a limited amount of data sharing.
Thanks to virtual data rooms, you can have tonnes of your personal or business data at your fingertips. You can even access it from your mobile phones or tablets from any part of the world. Many data room vendors allow VDR access without an internet connection.
2- Faster Business Deals
Deal-making has become faster, simpler, and safer because of data room software. A corporation from one continent can acquire a business from another continent within a data room. Companies can use VDRs for prospecting, pre-due diligence, due diligence, negotiation, contract signing, and even managing post-acquisition implementations within a virtual data room.
3- Data Security
Companies paying millions of dollars in fines and millions of customers losing their private information to cyber criminals are not something new. VDRs offer professionals and organisations industry-grade data security. For instance, the 256-bit SSL data encryption feature in a digital data room is mostly used in military setups and banks.
Moreover, VDRs typically incorporate the latest data security features, such as two-factor authentication, document access control, non-disclosure agreements (NDAs), remote device deletion, dynamic watermarks, customised document access, and restricted document viewing.
4- Cost Effectiveness
Businesses, especially startups and small to medium-sized enterprises (SMEs), have very limited financial resources. Digital data rooms help them minimise their data management expenses, including paper and printing costs, as well as business meeting expenses. The cost of hiring virtual data room providers is significantly less than that of maintaining a dedicated data management system.
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Choose the Right Data Room Services–Best Practices
It is essential to recognise that the quality of data rooms in the market varies. Always compare multiple data room services before making a purchase. Look out for
● Ease of use
● Customization
● Robust and responsive Customer support service
● Free trials
● Mandatory security features, and
● Cybersecurity certifications like ISO, HIPAA, FISMA, SOC1, SOC2, SSAE 16, FINRA, etc.
Some of the best virtual data room providers include iDeals, Ansarada, Firmex, Caplinked, Merrill, SecureDocs, INTRALINKS, and Digify.
