A secure virtual dataroom is an online repository that lets you store and share sensitive documents in a controlled setting. These solutions are crucial in supporting complicated projects and processes that require sharing of sensitive information with other parties outside an organization’s firewall. This includes the M&A process, litigation cases, due diligence for PE/VC investments as well as fundraising.
In contrast to the standard file sharing platforms like Google Drive or Dropbox, data rooms focus on security at both the document and system level. They rely on advanced encryption both in transit and in rest, and multi-level authentication processes. They also offer features such as watermarking, disabled printing and blind view to guard against accidental disclosures.
Some VDR providers make bold claims about the security of their systems 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 non-authorized users is keep your virtual data room secure not secure. Even 2-factor authentication does not stop this – because users can easily forward the second link to other users.
You should seek out a VDR that has ISO 27001 certification – it is the gold standard of security management systems for information. Choose a VDR provider that offers detailed activity tracking, as well as granular permissions to let you know who has accessed what documents. This is particularly important for M&A or fundraising processes, as it can provide you with an understanding of the level of interest your shared files are generating among bidders.