What is a Virtual Data Room (VDR), and How Does it Work?

Since the beginning of digitalization, for more than 20 years, business leaders have been concerned about the way they store their sensitive data. Unfortunately, many online solutions are not suitable for this task. They do not meet modern security standards and therefore are even dangerous, as the company runs the risk of a data breach. The virtual data room is an online space that is by far the most secure data management method on the Internet. This solution has been a revolutionary discovery for entrepreneurs worldwide, as they offer many benefits that fully meet today’s requirements.

What is a Virtual Data Room?

In the past, companies used so-called physical vaults to securely store all business information and close essential deals. Partners would come there no matter how far away they were and spend weeks doing due diligence on documents and other transaction stages. This took a lot of time and effort and did not guarantee complete data security. On the other hand, virtual data rooms have become an improved version of this storage, which use multiple layers of security and allow you to conduct all complex transactions remotely. You can use it to do IPO, M&A, fundraising, etc. VDRs enable companies to have complete control over all space processes, ensuring efficiency and protection. They also offer automated features to speed up many techniques and simplify your work.

The principle of a virtual data room

So, a virtual data room is a highly secured space with administrators and guest users. The administrators have complete control over all the processes that take place inside the VDR:

    • First, they upload all necessary documents and form a quality document system. In this, they are helped by automated mass uploading, conversion, and indexing functions
    • After that, they invite other users into the space by sending an email invitation
    • Further, they regulate the access and capabilities of all users according to their role, with complex permissions functions at their disposal for this purpose. They can change their settings an unlimited number of times
    • Administrators can assign tasks and assign tasks to their employees while working on the project
    • Throughout the process, administrators keep track of users’ activities: which documents they review, how much time they spend there, and what they do. Audit logs and automated reports help them with this

Security features of VDRs

The Data Room has been successful in the marketplace mainly because of its robust security features. It has been proven that using VDRs protects companies from leaks and system failures almost 100% of the time. To do this, online spaces use the following features:

    • Security Certificates -prove that data rooms are ready to handle sensitive data
    • Access and permissions settings – allows you not only to deny document visibility to users who are not directly related to this information but also prohibit copying, forwarding, downloading, and printing to reduce the chances of data leakage
    • Physical security – data centers are secured 24/7
    • Constant backups – keep your data safe under all circumstances. If there’s a failure, you can quickly restore the latest versions of your documents
    • Two-factor authentication -protect your login from unauthorized access
    • Secure Excel preview -Excel documents are usually essential reports, so VDR developers make sure they are secure
    • Advanced data encryption – strong protection against data leakage during storage and sharing, which encrypts the contents of the document from third parties
    • Performance of IP address restriction
    • Remote Destruction -Administrators can allow or deny access to any document at any time, even if it has been downloaded to a third-party device