What Should You Look for When Choosing a Virtual Data Room Provider?

Did you know that hiring uncertified virtual data room providers not only increases the chances of data loss, but a company may also face penalties from the regulatory authorities?

Virtual data rooms are considered safe havens when it comes to data sharing in M&As, joint ventures, licensing, or capital raising. However, not all data room vendors are identical in terms of providing what they promise.

So, what can you do to avoid scammers in the virtual data room industry? How would you identify the legitimate ones according to your needs? The following are some crucial pointers that must be a part of your virtual data room providers comparison.

1. Is the data room vendor secure?

Cyber protection is the backbone of electronic data room technology. It is one of the most crucial factors that separate data rooms from free online data-sharing tools.

Security certifications

The first step in this process is to check out if the online data room software vendor is certified by your regulatory authority. For example, if you run a brokerage company in the United States, your data management system must follow the guidelines set by FINRA. Therefore, only consider FINRA-certified data room services.

Similarly, European companies must look for GDPR-certified data room vendors. Other valuable data room certifications include SOC, FISMA, HIPAA, ISO, etc.

Security features

“Virtual data room is a place where security meets efficiency, safeguarding your critical business information while streamlining multiple administrative processes,” says Angleo Dean – CEO datarooms.org

Angelo defined the virtual data room technology effectively in the fewest possible words—data security and efficiency. Here are data room software security features that you will not regret purchasing.

Start with basic security features like two-step verification. Despite being common in data storage tools, two-step verification is vital in reducing the risks of unauthorized entries. Device IP access restrictions and document access settings are also mandatory features.

Advanced data protection features include view-only and fence-view mode. Both are very helpful in securing your business information when sharing it with third parties. Other advanced features include digital watermarks and remote device purging.

2. How much industry-relevant experience does a vendor have?

You might prefer Microsoft for operating systems, but when it comes to computer hardware, a majority will turn to HP, Dell, and similar names even though Microsoft sells computer hardware.

The same applies to the virtual data room industry. VDR services can be segregated based on the industries they serve. For example, virtual data room vendors like Digify and SecureDocs generally serve SMEs and small-sized transactions.

Similarly, iDeals virtual data rooms have earned a reputation for facilitating M&As, biotech licensing, and bankruptcy case management. They are also immensely famous in the legal sector, nonprofits, and investment banking.

That is why when you compare virtual data rooms, make sure they are already serving your industry. They will be better equipped to solve industry-relevant challenges.

3. Which pricing model does the data room vendor follow?

After considering the security and experience of vendors, the next step is to take a look at how they charge for their services. There are multiple ways a vendor might charge you. Here is what you should know about VDR pricing:

Per-page pricing is better for small-sized transactions, as you will pay for every page shared or stored in the online data room.
Per-user pricing is effective for small teams and businesses. You will pay for the total number of users in the data room.
Storage-based pricing requires the users to pay for the net data storage capacity used. The greater the consumption, the higher the price.
A flat monthly pricing model is highly recommended for regular usage or long-term transactions like capital raising and M&As.

4. Is the vendor easily verifiable on the internet?

Here’s what you can do:

Start your search on the internet. With the possibility of vendors lacking physical presence in your area, the internet becomes the best place to begin your search. Most service providers have websites where you can find information about their offerings, features, and contact details.
Explore professional social media platforms. Utilize platforms like LinkedIn to search for your desired vendor. Look for their profiles and check out customer reviews and recommendations. This can provide insights into the vendor’s reputation and the experiences of previous customers.
Consult trusted data room review websites. Seek assistance from reputable review websites such as Datarooms.org, G2, Capterra, and others. These platforms offer unbiased reviews and verified customer feedback on various data room vendors.