Understanding the Technology Behind Virtual Data Rooms

A virtual data room (VDR) is an online information storage system that enables a business enterprise to store and distribute business sensitive information and documents. The VDR’s are used by hundreds of thousands of organizations around the world.

VDR’s are not mere digital archives that are used as a mean of backup for business documents and records. Instead, they are considered as an inaugural interface for companies. A VDR enables an organization to organize, share, and track all of its data between all the internal and external stakeholders of the company.

Is a Virtual Data Room (VDR) Secure?

A Virtual Data Room is a cloud-based storage system. More often than not, when we hear the term “Cloud Storage” we tend to think of standard cloud hosting. However, VDR’s stand out for their data encryption and accessibility which paves the way for increased security and efficiency.

Standard cloud hosting services are also secure in terms of data transmission. The transmitted data is often encrypted during transmission to and from the server. The main reason for encryption is to prevent unauthorized parties from accessing sensitive information. The transmission lines are often secure but the documents are not.

Anyone with a link to where the data is hosted can access the information. Simply think of Google Drive to get a better idea. Any person with the link to a specific file is able to visit and view the hosted content. This possibility remains even though the data transfer service is encrypted or not.

When it comes to VDR’s, the documents themselves are encrypted regardless of the data transfer line encryption system which is already present. So in the event of a third-party breach, the organizations can be sure that an unauthorized party will be left with nothing but meaningless data in their hands. As a reason, any breach will not hinder the operations of the company as the data doesn’t make sense without the encryption key.

Multi-Factor Authentication (MFA)

Encrypting business sensitive data is only one part of the story.  Sharing files can be quite risky as you may not be able to track down the source of the leak in the event of a leak. This is where VDR’s stand out because of the existence of an established rule that prevents third-party accessibility.

There are two steps involved in ensuring the security of the documents. One is encryption. A document can only be decrypted by authorized users who can validate their identities once it’s encrypted. The second step of security is achieved by an SMS based OTP or a Bio-Metric system.  

Digital Watermarking

Multi-factor authentication systems protect your data from unauthorized access but that doesn’t necessarily mean they can aid in the prevention of leaks. This is where watermarking can be useful since it protects the data from such breaches.

Digital watermarking is the process that enables you to embed a distinctive mark on a video, document, audio or any other image-based data. This data can be identified by the help of a secure algorithm using machine learning and AI. Since digital watermarking is unique to every file, it enables you to accurately trace the source of the leak if one takes place.

Types of Files You Can Keep in a Virtual Data Room

Any kind of business data can be saved on the VDR. It may be intellectual property, business development plans, business sensitive information, industry related data, financial statements, and so on. The fact that many types of files belonging to various formats can be stored in a VDR has made it a very attractive mean of securely storing and transmitting data for businesses.

Does Your Business Need a VDR?

Many organizations such as corporates, investment banking companies, biotechnology companies, energy, and high profile financial institutions depend on the VDR’s to keep their information secure from potential breaches. The biggest advantage of a Virtual Data Room is the security it can provide to keep confidential information secure. So if your business has sensitive data and records that need proper security, a VDR is a very good option.

Virtual Data Rooms come in four components: encrypted storage, multi-factor authentication, secure file transfer, and digital watermarked files. However, it is safe to note that all VDR’s do not come with all these features mentioned above. Therefore, it’s important to find out the security features that are essential to your business before investing in a VDR.

One of the main reasons major organizations choose VDR’s to store their files is because of its ability to upload and download large volumes of documents quickly. They also track user information and document activity which provides better transparency. The ability to set user-specific authorizations and efficiently organizing the said data is another advantage. If you feel that your business can benefit from these advantages, it’s about time that you invested in a VDR.

DealRoom’s m&a software is an expert solution when it comes to VDR’s for mergers and acquisitions. Their brand is a fantastic tool that enables businesses of all sizes to benefit from increased security, transparency, efficiency, and accuracy.

Vendor Support

Once a business starts using a VDR, it requires them to understand its overwhelming uses and industry related best practices. If an organization doesn’t have experts to handle these areas, they are going to require guidance from the vendor.

It’s important to pick a vendor who provides easy and convenient support for any queries or issues that might arise. A VDR may be used by your company throughout the day, any time of the year. If that’s the case, it’s a good idea to pick a vendor who’s support services aren’t limited to nine to five work hours.


VDR’s offer much useful security and accessibility features for any business. They make Virtual Data Rooms a good investment for businesses who are interested in securing their sensitive data from potential breaches as well as ensuring access to their employees no matter where they are located.

In the modern world, businesses and their employees prefer to have access to their work data irrespective of their physical location. Many employees opt to work from home or other locations when they are away for business and personal reasons. Under such circumstances, it’s vital for companies to ensure accessibility while maintaining high levels of security for sensitive data. A VDR is a perfect choice to facilitate these needs.

Lori Wade

Lori Wade is a journalist from Louisville. She is a content writer who has experience in small editions, Lori is now engaged in news and conceptual articles on the topic of business. If you are interested in an entrepreneur or lifestyle. She has good experience and knowledge in the field.

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