A secure virtual dataroom is an online repository that lets you store and share sensitive documents in a secure environment. These specialized solutions can be crucial in supporting complex projects and processes that require the sharing of sensitive information with people outside an organization’s firewall. This includes M&A litigation, due diligence required for PE/VC investment and fundraising.
Contrary to common file sharing services such as Google Drive or Dropbox, data rooms concentrate on security from both the document and system levels. They rely upon advanced encryption, both while in transit and while at rest, and multi-level authentication procedures. They also offer features like watermarking, disabled printing and blind view to guard against accidental disclosures.
Some VDR providers make bold claims about how secure their systems are using terms such as “most secure virtual space’ and ‘highly secure data room’. The reality is that any system that allows authorized users to share login links or documents with users who are not authorized is not secure. Two-factor authentication isn’t enough to prevent this, as a user can easily forward the second URL to other users.
You should seek out a VDR that is certified with ISO 27001 certification – it is the gold standard for information security management systems. Choose a VDR provider that offers detailed activity tracking, as well as granular authorizations to let you know who has accessed what documents. This is especially important for M&A or fundraising procedures, because it will provide you with information about the level of interest that your shared files generate among bidders.