In the past, companies kept sensitive documents under lock and key because they were afraid that their sensitive files might fall into the additional hints improper hands. If this were to happen it could lead to losing opportunities, costly lawsuits, or even fines and data breaches.

Virtual data rooms (VDRs) are cloud-based software solutions that allow secure 24/7 remote access to files and folders through any device that has an internet connection. VDRs are cloud-based software options that allow secure, 24-hour remote access to files and folders through any device with an internet connection. They offer a range of collaboration tools that can facilitate deal-making and document management. These platforms also provide advanced features such as more granular authorizations and audit trails that reduce the risk of accidental deletion or malicious intention.

The most frequent use case for virtual data rooms is due diligence in a mergers and acquisitions transaction. Both the sell-side and buy-side require extensive documentation to be reviewed as a result, and it’s vital to have a common platform where these documents can be stored and easily accessed. VDRs streamline the due diligence process by significantly reducing the time required to complete due diligence.

Startups often use VDRs to collaborate with investors and advisors during fundraising rounds, M&A, and other transactions. These platforms allow startups to upload and organize their documents into an intuitive system that facilitates the due diligence process. These platforms also include collaboration tools like comments, Q&A areas and task assignments to assist teams in working more efficiently. Cloud-based models are provided by many modern vendors that do not require any hardware or installation. Self-hosted software, that is installed on servers that are in use at startup, provides more control and may require IT resources.