Businesses were accustomed other to keeping sensitive documents locked up, because they were afraid that they could be accessed by the right people. If this were to happen it could result in losing opportunities, costly lawsuits or even data breaches and fines.

Virtual data rooms (VDRs) are cloud-based software solutions that permit secure, 24/7 remote access to folders and files from any device with an internet connection. VDRs are cloud-based software solutions that permit secure, 24-hour remote access to files and folders on any device that has an internet connection. These platforms offer a variety of collaboration tools that can be used for effective deal-making and efficient management of documents. They also offer advanced features such as granular permissions, watermarking, and audit trails that reduce the risk of malicious or accidental deletion.

The most common use case for virtual data rooms is due diligence in an acquisition or merger transaction. It’s essential to have a platform that permits both the sell-side as well as the buy-side review and store documents. VDRs streamline the process of due diligence by significantly reducing the time required to complete due diligence.

Startups typically use VDRs in order to work with investors and advisors during fundraising rounds, M&A, and other transactions. They allow startups to upload and organize their documents in an intuitive system that speeds up the due diligence process. They also have collaboration tools such as commenting, Q&A sections and tasks to help teams stay organized and more efficient. Many of the leading companies offer cloud-based models, which requires no hardware or installation. Self-hosted software, that is installed on the servers that start up, provides more control, and could require IT resources.