A virtual data room, as the name implies, is cloud-based file storage. This type of storage allows businesses to store data and share confidential information without any worries of security, especially during a financial transaction.
During such an operation, parties can view documents and other vital data in real-time without having to resort to emails or other public file sharing options.
A couple of virtual data rooms make use of encryption protocols to secure essential files during a transaction. Meanwhile, other VDR services come with their virus and malware protection to further enhance their overall security.
What Type of Information Does VDR Contain?
Usually, the files a virtual data room stores are private and confidential. Businesses typically use VDR for storing important and sensitive data such as intellectual properties or patents.
Back in the early 2000s, virtual data rooms were introduced as document storage and sharing platform, which then transitioned into online storage and sharing. The fact that they were a lot less expensive and time-saving than housing physical documents make them a better option for lots of businesses.
Why Using a VDR is Beneficial?
The best benefit you can get from using virtual data rooms is the peace of mind knowing that your company’s valuable information is kept secure and confidential.
Apart from that, a virtual data room can upload tons of documents, grant permissions to specific users, monitor user activity, and a lot more. It’s for these features why a lot of companies place their trust in VDRs to secure their most confidential company data.
A virtual data room replaces physical data rooms when it comes to financial transactions. Since physical data rooms have limited capabilities, not to mention they’re time-consuming and inconvenient, they quickly became outdated and surpassed by virtual rooms.
VDRs can be used in a lot of fields, including:
- Corporate (sharing confidential documents within a corporation)
- Investment banking (keeping M&A deals moving)
- Litigation (sharing privileged files among a legal firm’s clients and other third-parties)
- Mining & energy (sharing documents for M&A, joint ventures, bid management, etc.)
- Biotech/Parma (securing and sharing intellectual property with third parties)
What Makes It Different from Other Sharing Services?
While generic sharing services can be somewhat comparable to a virtual data room, they lack in terms of property security. That is especially true when it involves a company’s highly confidential data.
Generic sharing services also make it quite a hassle and inefficient to manage large-scale documents. Meanwhile, VDRs are designed to share vast volumes of documents with other parties safely and securely. It allows any company to avoid delays, particularly during important transactions.
Also, the permission settings that generic sharing services have are often prone to error. In some cases, users can accidentally share sensitive data to the wrong people, thereby compromising that information’s confidentiality instead.
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With a virtual data room, however, you can benefit from specialized security and advanced control features alongside compliance with various security standards like HIPAA, GDPR, and SOC2.