Secure Virtual Data Rooms: 5 frequently asked questions

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The virtual data room market was valued at $1.3 billion in 2018 and is projected to reach over $3 billion by 2026. Yes, VDR market growth is phenomenal, but virtual data rooms are relatively new business solutions that gained more fame during the Covid-19 pandemic. Yet, numerous professionals and businesses still don’t know much about data room software.

Corporations, small businesses, enterprises, and professionals often come up with different questions about online data room software. Here are the top 5 frequently asked questions — and detailed answers to them — to give you a clearer picture of an electronic data room.

1. What is a virtual data room; what is it used for?

A virtual data room, commonly known as data room software, is a multi-functional cloud-based business solution. Virtual data rooms have three primary functions, including:

●         Data repository. Every electronic data room is essentially an online data repository where companies, firms, enterprises, government agencies, and professionals can store sensitive or routinely used documents. A lot of people think that data rooms are limited to businesses, which is not true. Professionals, freelancers, or independent contractors are using virtual data rooms as secure data repositories.

●         Virtual workspace. Secondly, an online data room is used as a virtual workspace equipped with practical collaboration tools. Data rooms are remotely accessible, and users can access, share, edit, download, and print documents in a data room from anywhere. Virtual data rooms allow the users to conduct online meetings, start group conversations, work on shared documents, collaborate on different projects, share updates, and whatnot.

●         Deal room. Lastly, modern virtual data rooms such as iDeals, Firmex, Merrill, etc., are used as virtual deal rooms where businesses conclude complex business transactions. Due to this reason, VDRs are common in mergers and acquisitions, real estate transactions, IPOs, auditing, etc.

2. How secure is a virtual data room?

Electronic data rooms are not ordinary business solutions; certified virtual data room providers host them. These data room vendors comply with strict local and internal data security standards, including FINRA, ISO27001, ISO 27081, SOC2, and Safe Harbor’s international privacy practices.

Besides, high-end data room services employ multiple layers of security (security features) to provide maximum data protection at different levels. Here are some notable security features in VDRs.

• Data backup: with the help of an encrypted VPN tunnel, the data room provider makes an encrypted copy (backup) of any document you upload.
• Multi-location servers: data room vendors have multiple servers at different locations; this minimizes the risk of data loss due to any type of disaster.
• Two-step verification: A data room requires any authorized user to log in with a password and a one-time generated private code.
• “Fence View” mode: it can be used to restrict any user from editing, printing, or downloading any document. It also prevents screenshots and photography of that particular document.
• Access restrictions: Data room management can set customized access permissions for different users according to their roles and responsibilities.

3. Who can use data room software?

Virtual data rooms are suitable for professionals and businesses in any industry. Secure data storage is currently a universal need of any business in the world. Data room software are presently serving many business sectors, including;

• Mergers & Acquisitions
• Investment banking
• Real estate
• Mining industry
• Healthcare
• Initial public offerings (IPOs)
• Fundraising
• Law
• Freelance cooperation
• IT

4. What to look for in a virtual data room?

Choosing a virtual data room depends solely on your business needs, but here are some essential elements you cannot ignore:

1. The data room provider must comply with the data security standards mentioned above.
2. Data room access and document security features should be top-notch.
3. The data room should be easy to set up and easy to use. Choose a data room that is easy to navigate and requires minimum training.
4. Robust customer support is one of the most important things to consider before choosing a data room provider. Ideally, look for 24/7 customer support.
5. The data room pricing should be transparent and reasonable. Make sure the features in the data room justify the pricing. It is highly recommended to compare virtual data rooms based on pricing, features, online reviews, and customer support.
6. The deployment mode offered by a data room should meet your needs. Make sure a VDR supports common operating systems such as Linux, Windows, iOS, and Android.

5. Are virtual data rooms expensive business solutions?

Virtual data rooms are not expensive; it depends on your business needs and what type of features you are looking for. Virtual data room providers come with flexible pricing plans; you can choose them according to your business needs. For example, some virtual data rooms charge as low as $5/user/month. Some vendors offer fixed pricing plans.

On the other hand, data rooms help you save money in different ways. Virtual data rooms are paperless solutions that can minimize paper, printing, stationery, and courier costs.

Summing it up

Virtual data rooms are not expensive at all; it depends on how you want to use them and what type of pricing plan you choose. Most importantly, they are highly secure data repositories where you can safely store your business data, and their cost-effectiveness and ease of use make them a desirable business asset.

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