What is an Online Data Room?

A virtual dataroom is a cloud-based platform that lets multiple parties access documents and communicate, as well as collaborate on projects without compromising confidential information or losing control over the file. They can be used to facilitate M&A, fundraising and strategic reviews as well as internal document sharing.

The most effective online data rooms can provide granular access controls, access settings, custom analytics secure storage, and digital watermarking of downloaded files. They also offer an intuitive user interface that allows collaboration to be made easier. They also provide templates, and ways to simplify uploading.

An important feature is redaction, which blacks out parts of a document to ensure personally-identifiable information stays private. Some VDRs provide a fence-view feature that encloses the document within an electronic frame, thus preventing screen shots. Other features include two-factor authentication, IP and time access restrictions, and a chat feature that allows for real-time communications between users. They can be hosted by a range of providers and offer various pricing policies such as pay-per-page, pay per-user and a bespoke experience for enterprises that allows unlimited users as well as a huge storage capacity.

A well-organized online data space will help investors feel confident that there won’t be unexpected surprises, which is essential in a deal process. It also proves that you’ve thought about the information you’d like to disclose and that your business is serious. This can boost the value of a business. Even if a company is unsure of the time needed to conclude a deal, it is important that they make use of a dataroom online when preparing for potential exits or investments.