In the past, businesses kept sensitive documents under lock and key, fearing that their confidential documents could fall into wrong hands. This could lead to loss of opportunities, expensive litigation, or even data breaches.

Virtual data rooms (VDRs) are cloud-based www.virtual-dataroom.blog/how-to-use-virtual-data-room-for-audit/ software solutions which allow secure remote access, 24 hours a day, to folders and files on any device that has an internet connection. VDRs are cloud-based software solutions which allow secure, 24/7 remote access to files and folders from any device with an Internet connection. These platforms provide a range of collaboration tools that facilitate deal-making and document management. They also provide advanced features like watermarking, granular permissions and audit trails that reduce the risk of accidental or malicious deletion.

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 require extensive documentation to be reviewed and it’s crucial to have a common platform where documents can be stored and easily accessed. VDRs reduce the time needed for due diligence by an impressive amount.

Startups often use VDRs to work with advisors and investors during fundraising rounds, M&A, and other transactions. These platforms allow startups to upload and organize their documents into an intuitive system that accelerates the due diligence process. These platforms also come with collaboration tools such as commenting, Q&A areas, and task assignments to allow teams to work more efficiently. A majority of modern vendors offer a cloud-based model that doesn’t require any installation or hardware. Other options include self-hosted software that is installed on the servers of the startup which offers more control but could require IT resources.