With the globalization of businesses and increased scrutiny of data, there has been an increased need to replace physical data rooms to increase security and allow effective management of data. Virtual data rooms are an attractive alternative to the traditional data rooms, as they are widely accessible, are immediately available, and provide much more security to data.

Virtual Data Room

What Is a Virtual Data Room?

A virtual data room (VDR), or simply a data room, is a secure virtual space that is used as a repository of a company’s documents. Virtual data rooms enable the secure sharing of information and documents between a company and its clients, contractors, and investors in a controlled environment. Virtual data rooms offer features such as document access restrictions, encryption, document watermarks, and self-destructing documents.

What Does a Good Virtual Data Room Look Like?

What do you need to consider when looking for a virtual data room? Well, a virtual data room must enable you to store sensitive business documents securely and compliantly. The documents must be accessible from anywhere by authorized persons or groups of people. A virtual data room acts as leverage in business transactions that require secure document storage, management, and sharing.

Virtual data rooms are useful to companies seeking to carry out due diligence as well as manage critical assets throughout their life cycle. Companies seeking to enter into different types of collaborations, such as mergers and acquisitions, patenting, licensing, or other joint venture investments, can use virtual data rooms to enhance the secure sharing of files and documentation and ensure data privacy. Accordingly, virtual data rooms need to be integrated into an organization’s cyber risk management strategy.

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Important Features of a Virtual Data Room

Virtual data rooms are mainly designed with different features and capabilities since they target different industries. Before settling on a specific virtual data room provider, a company must evaluate its needs for one. Be that as it may, a good VDR should contain certain documentary management features. These include:

Document security

Since companies use virtual data rooms to hold sensitive information, it only makes sense that they contain good security features, such as:

  • Document access restrictions that control who can access a document, when they can do so, what they can do with it (e.g., manage, collaborate, review, download, etc.)
  • TLS encryption to protect information during transmission within the virtual data room and outside of it 
  • Backup of sensitive content
  • Multi-factor authentication to prevent unauthorized access
  • Mobile device access
  • Integration of security protocols, including virus scanning, advanced threat protection, and data loss prevention
  • Use of document watermarks
  • Utilization of self-destructing documents, expiration of access, etc.

Document tracking

A good virtual data room allows a seamless ability to track multiple aspects of document access, such as:

  • Who has viewed a document
  • When that access occurred
  • To whom the document was sent or shared—and to whom it can be sent or shared
  • Did the individual to whom the document was sent or shared open it and when
  • How much time someone spent reviewing a document
  • Which documents are viewed the most
  • Notifications when users make updates, what updates are made, and when new documents are uploaded

In addition to the above, virtual data room document tracking encompasses a self-auditing capability that can be generated in compliance reports.


A good virtual data room eases usability through features such as:

  • Integration with Microsoft Office (e.g., Word, Excel, PowerPoint, OneDrive) and Google collaboration and productivity tools
  • Advanced search capability
  • Bulk file uploads
  • Drag-and-drop functionality
  • Help section for ease of use for every user
  • Multilingual access
  • Multi-factor authentication and single sign-on (SSO) access so that users have secure and easy access

User management

A good virtual data room encompasses easy user management options that include:

  • Multiple levels of user permissions for easy management of which users can view, edit, share, and download a document by assigning permissions as needed
  • Single or bulk user invitation and management
  • Group setup so that an administrator can easily manage multiple users by dividing them into groups with different access levels and functions in the data room 
  • Restricted viewing so users can access only those documents to which they have access

Other virtual data room features

Other virtual data room features include integration with third-party solutions (e.g., Slack, Microsoft Teams, etc.), task prioritization, FAQs, intuitive interfaces, and live chatting.

Virtual Data Rooms vs. Traditional Cloud Storage

Nowadays, businesses have more options when it comes to data storage. The two most used options are traditional cloud storage and virtual data rooms. These two are different in the following ways:

Efficiency of virtual data rooms

Virtual data rooms are better than traditional cloud storage when it comes to efficiency. With a virtual data room, multiple users access the platform simultaneously, and tasks can be scheduled on the same platform. With traditional cloud storage, administration of users is more time-intensive and access management is more complex.

Communications with virtual data rooms

With virtual data rooms, communication between parties is confidential and secure. This is because data is encrypted as it is transferred between users. This is perhaps the biggest advantage of virtual data rooms. With traditional cloud storage, this is not possible. Virtual data rooms allow private communications that controls access to private content.

Monitoring using virtual data rooms

In a virtual data room, monitoring files and users is very easy and effective. You can easily monitor the changes being made on documents, by whom, and how long they spent on a document. In traditional cloud storage, monitoring is not possible. Documents cannot be tracked like in a virtual data room.

Security with virtual data rooms

Traditional cloud storage solutions offer some level of security. However, their security controls are inadequate when compared to the level of security offered by virtual data rooms where data is encrypted with the latest encryption standards. Virtual data rooms control sensitive content access. They also allow users to restrict copying, downloading, and printing of documents, thus adding a level of security.

Generating reports with virtual data rooms

Virtual data rooms have various reporting tools that are useful when an organization wants to draw insights. These insights can be used to strengthen a business position during negotiations and closing deals and to demonstrate regulatory compliance. Traditional cloud storage, on the other hand, does not offer such features. 

Virtual Data Room Use Cases

In the midst of technological advancements, organizations have evolved in terms of how they store, use, and share data. With the increase of sensitive data being sent and shared during certain business transactions, the risk of security breaches that could result in significant losses increases. This is where virtual data rooms come into play. Some of the most popular use cases for virtual data rooms include:

In mergers and acquisitions

A lot of information sharing happens during mergers and acquisitions. This is especially the case when parties conduct due diligence before deals are closed and major decisions are made. During these business phases, a lot of documents are shared between parties, with each party having multiple people involved. Most of the time, the documents being shared contain sensitive information about the businesses involved, and this information must be safeguarded for compliancy and privacy purposes. Here, virtual data rooms streamline the whole process of a merger or acquisition. They simplify tasks, protect sensitive information, enhance effective communications, and automate every process involved.

In initial public offerings (IPOs)

Going public and offering an initial public offering is a time-consuming, tedious task that requires an incredible amount of paperwork. The mere essence of going public means that a business now requires greater transparency than before with its customers, users, stakeholders, the public, and regulatory authorities.

For a company going public to effectively manage the plethora of documents that are required, a virtual data room is an excellent option. Multiple third parties will be involved in the entire IPO process, and using a virtual data room ensures that all sensitive company data is safely shared amongst all stakeholders.


There are numerous situations where external parties need to access and review a company’s data. Specifically, when lawyers, accountants, or auditors need to take a look at a company’s records and other documentation, a company must provide access without exposing them to a potential breach and creating a compliancy violation. Here, a virtual data room can be used to facilitate virtually all document-sharing needs a company may have.

Board communications

In some companies, board members are actively involved with the company’s operations. However, board members typically do not use company-provided technology equipment (e.g., laptops, smartphones, etc.). Communications of critical information with boards of directors must be secure and compliant. Storing that content in a virtual data room allows the management of information flow and guarantees its safety.

Using a Private Content Network as a Virtual Data Room 

Organizations can use a private content network as a virtual data room. Specifically, Kiteworks-enabled private content networks extend zero trust beyond applications and workloads to sensitive content, protecting and controlling to whom, when, how, and where it is communicated across email, secure file sharing managed file transfer, application programming interfaces (APIs), and web forms.

Outcomes of Kiteworks-enabled private content networks include:

  • Seamless collaboration with both internal and external stakeholders where virtual data room files and folders are exposed to those who have authority to view, download, edit, share, and send them
  • Accelerate deals with unconstrained productivity with seamless Microsoft Office and G Suite editing, mobile and web interfaces, detailed folder and file management, and more
  • A defense-in-depth security approach that includes the ability to deploy on-premises, on FedRAMP, or as a private cloud, integration with multi-factor authentication, SSO, and other identity and access management capabilities, and hardened virtual appliance and optional HSM key management
  • Ability to comply with industry and government regulations such as SOC 2, the Health Insurance Portability and Accountability Act (HIPAA), the General Data Protection Regulation (GDPR), and FIPS 140-2, among many others

Kiteworks-enabled private content networks are used by thousands of organizations globally to keep sensitive information private and to demonstrate compliance with various regulations and standards.

Schedule a custom demo to see how you can create virtual data rooms using Kiteworks.


Related Content:
What is the Most Secure File Sharing?
What are Cloud File Sharing Solutions?
What is Enterprise File Sharing Software?
How to Subscribe to Popular Posts And Use HIPAA-compliant Cloud Storage?
What is a Secure Virtual Data Room?

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