What is an Online Data Room?

A virtual data room is a secure cloud-based service that allows for different parties to see documents, share information and collaborate on projects without the risk of leaking confidential information or losing control over the document. They can be used to facilitate M&A, strategic and fundraising reviews as well as internal document sharing.

The most effective online data rooms allow for the control of access to data in a granular manner, as well as permission settings, custom analytics secure storage and digital watermarking of downloaded files. They also provide a collaborating environment that is friendly for users. They also provide templates, and ways to speed up uploading.

An important feature is redaction, which blacks out parts of a document to ensure personally-identifiable information stays private. Certain VDRs include a fence-view feature that wraps the document in a digital frame, preventing screen shots. Other features include IP and time restrictions along with two-factor authentication and chat technology to facilitate real-time communication. They are hosted by a variety of providers and offer a variety of pricing policies including pay-per-page, pay-per-user and a customized enterprise experience with unlimited users and a large storage capacity.

A well-organized online data space will help investors feel secure that there won’t be any hidden surprises, which is important to a deal process. It also shows your potential investor that you’ve considered the information you want to share and that you’re committed to your business. This can increase a company’s valuation. Even if a business isn’t certain of the time it will take to conclude a deal it is important that they utilize an online dataroom while planning for possible deals or exits.