There are hundreds of data room vendors operating in the billion-dollar virtual data room market. It isn’t difficult to understand that all the virtual data room providers may not be offering up-to-the-mark services. Some may lack in the data security department, while others may not be good in document management.

In fact, the changing dynamics of different business sectors also demand customized solutions. That’s why even high-end online data room software may not be what you need for your business or personal use.

So, how would you know which data room software is right for you? It depends on what you want to achieve from the electronic data room technology.

Here is a detailed introduction to virtual data rooms, their common uses, and the things to consider before choosing a VDR for your business.

What is virtual data room software?

Virtual data rooms are digital data management solutions, aka online databases used to store, organize, distribute and manage corporate information. Online data rooms are mostly equipped with collaboration or communication tools that help in deal management and business communication needs.

Data rooms are not limited to specific types of businesses or industries — they can serve every business industry equally well.

Due to their unmatched cyber security features, virtual data rooms are a regular ingredient in data-driven transactions like M&As, fundraising, strategic partnerships or ventures, corporate consolidations, asset management, or real estate.

What is a virtual data room used for?

Data room technology is commonly used for:

• Data sharing and management
• Fundraising
• Due diligence
• Board communications
• Mergers and acquisitions
• Asset lifecycle management
• Litigation
• Initial public offerings (IPOs)
• Real estate management
• Record management
• Project management

The good thing about modern-day data room services is that you can hire a vendor having expertise and a proven record in your particular industry. Here are some of the best virtual data room providers in different sectors.

1. iDeals virtual data rooms — a highly suitable software solution for M&A, due diligence, life sciences, litigation, and board communication.
   
2. DealRoom — a high-end virtual deal room best suited for deal management.
   
3. Merrill Datasite — recommended mostly for corporate development, project management, and deal management.
   
4. Google Workspace — the best solution for business communication, virtual meetings, and medium-level data sharing.
   
5. Box — best suited for small-scale businesses with smaller data or project management needs.

Things to consider when selecting a virtual data room

One of the most important things to do is write down the objectives you want to achieve from data room technology. It will allow you to determine what type of features you have to have in your VDR.

If you just intend to use it as a data repository, you don't need to spend money on project management features. In fact, a data room without communication tools would do nicely. Still, there are some features that are hard to compromise, and make sure you have them in your VDR.

1. Security features

The security features may vary from vendor to, but the following ones are mandatory.

• Multi-location data servers. A vendor with data servers at different locations will ensure that your documents are stored in different places. It minimizes the chances of data loss.
  
• Two-factor authorization. It restricts unauthorized people from accessing your data room.
  
• Multiple-step verification. Just like two-factor authorization, this feature involves identity confirmation steps to boost data room security.
  
• Cybersecurity and data management certifications. Make sure the vendor is at least ISO certified. Useful certifications include FINRA, HIPAA, SSAE, SOC1, SOC Type II, and GDPR.

Other useful security features include granular access, NDA templates, and remote device purging.

2. Document management features

Document management features improve your work efficiency and save time. The following are very handy document management features:

• Drag-n-drop. Using this feature, you can just drag one or more files directly into the VDR.
  
• Bulk-upload. It ensures you can upload documents in multiple quantities.
  
• Document viewer. A document viewer eliminates the need for integrating eternal document viewers.
  
• Document linking. The VDR must allow you to link multiple documents and share them with authorized data room users.
  
• Advanced text search. It is one of the most useful data management features that allow you to search any document with the help of a keyword or a phrase.

Other notable document management features include digital watermarking, e-signatures, online editing, version control, and auto-indexing.

3. Document security features

Document security features are mandatory for internal security and full control over your business information.

• Document access control. It is the ability to restrict any user(s) from performing any specific action on the document or define access permissions.
  
• Fence view and View only mode. These features are necessary if you keep highly privileged data in your VDR. They make sure nobody can edit, print, save, scan, screenshot, or photograph your documents.

Other useful document security features include document shredding, document access revocation, and file tracking.

Final words

Virtual data room providers now offer industry-based custom solutions, almost fulfilling all data room needs for specific businesses. But to find out what data room provider is best for your particular needs, you should clearly understand your must-needed features in data security, document management, and document security, and compare virtual data rooms against them.