In the past, businesses kept sensitive documents under lock and keys because they were afraid that their sensitive documents could fall into wrong hands. This could lead to loss of opportunities, expensive litigation, or even data breaches.
Virtual data rooms (VDRs) are cloud-based software solutions that provide secure, 24/7 remote access to folders and files from any device that has an internet connection. VDRs are cloud-based software options that provide secure, 24 hours a day remote access to folders and files through any device with an internet connection. These platforms provide a range of collaboration tools to facilitate dealmaking and document management. They also include advanced features anchor like watermarking, granular access, and audit trails that reduce the chance of malicious or accidental deletion.
The most popular use-case for virtual data rooms is due diligence during a mergers and acquisitions transaction. Both the sell-side and buy-side must review extensive documentation and it’s crucial to have a common platform where the documents can be kept and reviewed easily. VDRs reduce the time needed for due diligence by a significant amount.
Startups use VDRs for collaboration with advisors and investors during fundraising rounds, M&A and other transactions. These platforms allow startups to upload and organize their documents into an intuitive system that helps speed up the due diligence process. They also provide collaboration tools such as comments, Q&A sections, and tasks to aid teams in staying organized and work more efficiently. Many modern providers offer a cloud-based model, which requires no hardware or installation. Self-hosted software that is installed on servers that are in use at startup, provides more control, and could require IT resources.
