Quick Summary
A Virtual Data Room (VDR) is a secure digital space where companies store and share sensitive documents with authorized parties during fundraising, due diligence, or M&A processes.
A Virtual Data Room (VDR) is a secure online repository used to store and distribute confidential documents during due diligence, fundraising, M&A, or other sensitive business transactions. It replaces physical data rooms and provides controlled access with audit trails.
Key Features of VDRs
- Document Security: Encryption, watermarking, DRM
- Access Control: Role-based permissions, NDA acceptance
- Audit Trail: Track who viewed what documents when
- Q&A Module: Manage investor questions efficiently
- Version Control: Keep documents updated
- Search Functionality: Full-text search across documents
- Mobile Access: View documents on any device
Common VDR Providers
| Provider | Best For | Pricing |
|---|---|---|
| Digify | Startups, simple deals | $$$ |
| Intralinks | Enterprise M&A | $$$$ |
| Merrill Datasite | Large transactions | $$$$ |
| Box/Dropbox | Early stage, budget-conscious | $ |
| Google Workspace | Basic sharing needs | $ |
Documents Typically in a Data Room
- Corporate: Incorporation, cap table, shareholder agreements
- Financial: Audited statements, projections, tax returns
- Legal: Contracts, litigation, IP, compliance
- Commercial: Customer lists, pipeline, market analysis
- Technical: Architecture docs, security audits, code samples
- HR: Org chart, key employee contracts, benefits
Data Room Best Practices
- Organize documents in clear folder structure
- Use consistent naming conventions
- Redact sensitive information appropriately
- Set appropriate permission levels by role
- Enable watermarking with user details
- Prepare an index/table of contents
- Keep documents current and versioned
- Monitor access and review audit logs
VDR vs Simple File Sharing
| Feature | VDR | Regular Cloud Storage |
|---|---|---|
| Security | Bank-grade encryption | Standard encryption |
| Audit Trail | Detailed logging | Limited |
| Access Control | Granular permissions | Basic sharing |
| NDA Integration | Built-in | Manual |
Key Points
- Secure repository for confidential documents
- Used in due diligence and M&A
- Features: encryption, audit trails, access control
- Providers: Digify, Intralinks, Box
- Replaces physical document rooms
- Enables efficient remote due diligence