IT Explained: What Is a Virtual Data Room?


Have you been doing research and checked Google for whatever a virtual data room might be? Is that a software? Is that something you need to buy? What is it for? Fear not. With this quick overview, we try to answer your questions. Let’s jump right into it.

A virtual data room, or VDR in short, is a place on the Internet where users can store and share documents. From the feeling of the term, one could think that it’s something new related to cloud file-sharing, and while that actually could be the case, the term data room is a lot older than the cloud computing hype.

Who uses virtual data rooms and why?

So what do you use a virtual data room for? Often you could find individuals and enterprises involved in eDiscovery, M&A (mergers and acquisitions), and VC (venture capital) using virtual data rooms to put all their data and files in one single place for review, archiving, and legal sake. Some people also refer to this as “the deal room.” Next to that, virtual data rooms are also often used by the board members of large enterprises to collaborate in a secure environment.

All of this usually does not happen on the same network as the parties come from different companies. You could say that a virtual data room is a kind of extranet, so it’s not public and not only running within your own company as an intranet would. Using virtual data rooms is primarily done for governance and compliance, not for the sake of a better collaboration user experience.

Team working together office startup planning strategy cloud boardroom productivity vdr virtual data room mna vc software security solution review guide info

Virtual data room vs. Dropbox and others

Okay, understood, but why don’t we just all use popular file-sharing providers in the cloud? Did you ever get an email containing a phrase like, “I uploaded the contract in our Dropbox shared drive”? I hope not. A strong differentiator here is InfoSec and overall digital security, encryption, and protection with a full audit log. The actual features, of course, vary depending on what virtual data room provider you choose and what kind of plan you pay for. Here are some features you might require:

  • Data encryption
  • Audit log and activity tracking
  • Digital rights management
  • Access management
  • Online (in-browser) document viewer
  • Bulk upload, drag and drop
  • As much file storage space as you need
  • Usage functions fit for your use case
  • External threat protection

Who are the best virtual data room providers?

I’d love to give you a definite go-to company now, but often there is not a single right software solution for all. Depending on your budget, feature requirements, due diligence requirements,  business requirements, legal requirements and all your partner’s requirements you need to carefully probe and compare the VDR solution and digital deal room providers out there.

Related post: 10 Step Due Diligence Checklist for Choosing a Virtual Data Room Solution

I am not endorsing any of the following in particular, but if you want to start your research from here, I’d recommend you to look at the following companies and products, which are ordered alphabetically:

  • BlackBerry Workspaces (WatchDox)
  • Brainloop Secure Dataroom
  • Citrix ShareFile virtual data room
  • Drooms NXG virtual data room
  • Intralinks Virtual Data Room
  • Merrill DatasiteOne
  • Nasdaq Boardvantage
  • Safe-T Software-Defined Access Suite
  • SecureDocs Virtual Data Room

Most certainly, there might be other good ones as well, but these are a good starting point for your comparison and review. It’s also worth noting that you should look for “local” providers or at least pick a global one that understands the legal requirements of all the nations involved in the deal and the respective laws.

Share your experiences

I hope you found this quick summary useful and learned a few key facts. If you already have experience working with VDRs and other types of deal rooms, please make sure to share your experiences below in the comments. I wish you all the best for your project and work.

Photo credit: The feature image “Coffee and work” has been done by Valeriy Khan. The photo in the article “Teamwork in the workplace” was done by Štefan Štefančík.
Editorial notice: We use the term “Dropbox” only as a generic term in this article. It can be interchanged with any other similar consumer cloud file-sharing service.

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Christopher Isak
Christopher Isak
Hi there and thanks for reading my article! I'm Chris the founder of TechAcute. I write about technology news and share experiences from my life in the enterprise world. Drop by on Twitter and say 'hi' sometime. ;)
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