Frequently Asked Questions About Virtual Data Rooms

Let’s imagine a situation where you discuss a vital contract, the details of which are confidential. One of the invited partners secretly takes a photo of the document on his smartphone and uploads it to the Internet. As a result, the deal is blown up. In another case, an employee with trusted access takes a photo of a secret document from his desk, and then it appears in one of the leaked telegram channels. There are dozens of situations where a confidential document can be lost or intentionally compromised, but there are a few ways to counter this. One solution is the use of permanent or temporary cloud storage, or what they call virtual data rooms.

What is a Virtual Data Room?

According to many studies, this approach to working with documents already increases the organization’s efficiency. For example, a virtual room is a space where records are sorted into folders, and all participants have a certain level of access rights to them. They can download files, upload them, and share them. This space format allows you to organize convenient collaboration in various production business processes.

Data room software provides secure data exchange and storage in a private corporate cloud. The virtual data room allows you to create a safe storage space with restricted access rights and the ability to put non-erasable watermarks on sensitive documents. In addition, the DRM protection component integrated into the virtual data room, a full-fledged analog of AD RMS, allows you to protect data throughout the entire life cycle of a document, including after it has been unloaded from the virtual data room.

Why is VDR needed?

After defining the term VDR, it’s worth answering the question of what a virtual data room is?

  • To store any documents with the possibility of differentiation of access rights, including drawings, diagrams, and archives. The following formats are marked: .doc, .docx, .rtf, .jpg, .png, .pdf, .tif, .tiff, .ppt, .pptx;
  • Unload documents in .pdf or the original format of the downloaded document;
  • Create a convenient folder and file structure, and modify it if necessary;
  • Use the two-factor authentication with SMS or one-time passwords to confirm the access;
  • Send documents to partners directly from the system by specifying their email addresses or give access to documents and folders via direct shared links (you can set validity periods and restrictions on actions with documents as well);
  • Work from any device, phone, or tablet regardless of location;
  • Have no limit on the number of copies of labeled documents (the system is capable of creating many unique combinations of a single page of text);
  • Mark all documents placed in the system with a marking that is invisible to the human eye and unique to each user;
  • Conduct expert analysis of leaked documents and identify the source by a photo or a screenshot of a document fragment.

Where is the virtual data room applicable?

Financial sector. Companies that work with critical information need secure means of document delivery and data access rights control for branches and external counterparties. Data room due diligence securely stores essential documents and files for M&A transactions. More details here: Data rooms provide a single space for multiple parties to access and record information.

Project organizations. Such companies often face the situation when the working group needs to provide access to data for a certain period and guarantee blocked (revoked) access to the documents after the project ends.

Communication service providers. Telecom providers need the means to protect user data and mark documents following regulatory requirements.

Retailers. Retail-related organizations need the means to protect the data on merchandisers and sales representatives’ devices which can be of commercial value. All organizations require sophisticated security and controls on the distribution of information sent to external contractors.

Benefits of using a virtual data room

  • Reduced incident investigation costs: The history of each employee’s work with each document is stored.
  • Reducing incidents of data leakage and compromise.
  • Increased ability to integrate with DLP solutions to provide additional layers of data protection (ICAP support).
  • Reduces external and internal network traffic: Email attachments are automatically converted into secure links.
  • Access control to company data wherever it resides (DRM).
  • Possibility to revoke previously granted rights.
  • Maximum protection during workstation and server data exchange without using a VPN
  • Detailed reports on the use of corporate data by schedule.
  • Bypass size limitations on email attachments.
  • Significant reduction in file size.
  • Single web interface for managing all features: Data backup, data protection on mobile devices, document sharing.
  • Virtual Data Room generally does not require significant resources for implementation.
  • Easy and convenient day-to-day use: No need for employee training.

Key factors in choosing a VDR

Security. Of course, this aspect will interest you the most. Choosing a developer who stores all the information is vital rather than giving it to subcontractors. And the certification, of course. Plus reviews, customers, and so on.

Price. Most developers build a pricing policy based on the space used and the amount of time the online data rooms are open. Some law firms specializing in M&A can afford to provide their own VDRs. If you need a VDR once, use a service that will provide storage based on the amount of time. But if you plan to use it regularly for many transactions per year, then purchasing a subscription is your choice.

Convenience and functionality. Here you need to consider the format of files the system can handle, whether you can download zip, and what OS it’s available. If you work with international transactions, it is essential that VDR is open 24/7 and supports multiple languages. Pay attention to whether there is a free demo version.


Whatever you use to transfer files between company employees or external counterparties — public cloud or FTP — these mechanisms can be considered obsolete today. It’s about the same as putting a document into a desk drawer; in that case, no company data protection is out of the question. At the same time, the virtual data room is your safety for storing corporate information from which no one can take anything without being noticed. Every attempt and every action is recorded and monitored.

A virtual data room is an effective tool for storing and sharing documents with internal and external agents. The creation of folders, delimitation of access rights, and other functional features of VDR allows comfortable, collaborative interaction within the workflow. However, the cloud storage and the files contained in it need protection, which can only be ensured comprehensively: by using a secure VDR space and invisible document labeling. Implementing such a solution in a company will create a preventive effect and identify the source in case of informat