Businesses used to keep sensitive documents secure for fear that they might get into the hands the wrong people. This could result in lost opportunities, costly litigation, or even data breaches.

Virtual data rooms (VDRs) are cloud-based software solutions that permit secure remote access, 24 hours a day, to folders and files from any device that has an internet connection. VDRs are cloud-based software solutions which allow secure, 24/7 remote access of files and folders on any device that has an Internet connection. These platforms offer a variety of collaboration tools for effective dealmaking and efficient document management. These platforms also come with advanced features like more granular authorizations and audit trails that minimize the chance of accidental deletion or malicious intention.

The most commonly used use case for virtual data rooms is due diligence in an acquisition or merger transaction. Both the sell-side and buy-side must review extensive documentation and it's crucial to be able to access a single platform from which these documents can be stored and easily reviewed. VDRs streamline the process of due diligence drastically reducing time-to-review.

Startups use VDRs to collaborate with advisors and investors during fundraising rounds, M&A and other transactions. These platforms allow startups upload and organize their documents into an intuitive system which speeds up the due diligence process. They also feature collaboration tools such as commenting, Q&A sections and tasks that aid teams in staying well-organized and work more efficiently. Many of the leading providers offer a cloud-based model that does not require hardware or installation. Self-hosted software, that is installed on the startup servers, gives greater control and may require IT resources.