A secure virtual data room is a secure online repository for storing and sharing sensitive documents within a controlled environment. These special solutions are crucial for supporting complex projects and business processes that require disclosure of confidential information to parties beyond the firewall of an organization. This includes the M&A process, litigation cases, due diligence for PE/VC investments and fundraising.

Data rooms are distinct from the standard file-sharing services such as Google Drive or Dropbox because they are focused on security at the system and document level. They rely on advanced encryption both in the process and at rest as well as multi-level authentication techniques. They also offer features such watermarking, disabled print, and blind view to avoid accidental disclosures.

Some VDR providers make big claims about how secure their systems are using terms such as “most secure virtual data room’ and ‘highly secure data room’. Any system that allows users to share login information or documents with users who are not authorized is not secure. Even 2-factor authentication does not stop this – as a user could easily forward the second link to anyone else.

You should seek out the VDR that has ISO browse around this site 27001 certification – it is the gold standard in information security management systems. Find a VDR that offers detailed activity tracking, as well as granular authorizations that let you see who has accessed which documents. This is crucial for M&A and fundraising processes as it can provide insight into the level of interest the shared documents generate with bidders.