The days of storing your company’s documents in a physical file cabinet are long gone. If you’re looking to give your startup a good look during due diligence by potential investors, there needs to be proof of dependability. This is exactly what virtual data rooms offer — a digital space that serves as a safe haven for an organization’s most sensitive information. 

So, what is a VDR and how do you pick the best provider? Let’s find out.

What is a virtual data room?

As the name suggests, a virtual data room, also known as VDR software, is a digital space that provides companies with a safe location for it to store and share confidential information. Usually utilized during financial transactions, they can also function as ongoing document repositories which allow businesses to organize vital documents for swift, secure access. They can be used by legal firms, private equity and venture capital, investment banking firms, and life science companies among others.

Features of reliable data room software

  • Security. An efficient data room for startup should provide its users with a secure online database. Any leak of sensitive information from an organization could be catastrophic, so good VDR software should have strong security measures put in place.
  • Artificial intelligence. Business deals involve a lot of paperwork, with files and documents being shared back and forth. It is difficult to keep track of this information, that’s why the ‘full-text’ feature of some AI-enabled VDRs is great. It helps you find the exact document you’re looking for even if you don’t recall exactly what it is.
  • Tracking. A good electronic data room should provide its users with effective tracking capabilities. It should be able to keep tabs on members logging on and off, time spent viewing documents, and other specifics. This will help your company easily track leaks and plug them off proactively.
  • Live chatting. This is a must-have if you’re planning on letting your employees work remotely. Team members can’t always be in the same location, which is why virtual data room software that gives you live chatting capabilities would be optimal. 

How to choose the best data room for your startup?

When you’re looking to optimize your company’s processes with a VDR, your preferred provider would be crucial to its success. There are four major areas that you need to look into when you compare data room providers, they are:

1. User interface and provider specialty

Most quality virtual data rooms offer similar features. So, you must go more deeply and find out which solution has the most easy-to-use interface and security settings. This goes beyond avoiding stress, as a single information breach may hurt your business especially during IPOs, and depending on the project, lead to litigations. This is why the ease of use and access is vital, so you can properly maneuver your way through the interface and make all necessary adjustments. 

2. User activity tracking reports

Your provider should give you the right tools to not just control access to your organization’s documents, but also track user activity. When picking a VDR software provider, ensure that they let you monitor the login activity of every user. With this information, you gain valuable insight into document activity, with knowledge of where, when, how many times, and by whom each document has been accessed.

3. Extensive features and adaptability

A competent data room should be dedicated to helping you provide clients with a tailor-made experience that fits their specific needs. Don’t be drawn in by glowing features and affordable prices, take the time to survey the market for a provider that gives you features you actually need. 

Reputable VDR providers continually upgrade their services with the latest tech and security features. But ensure that these features benefit your company’s processes and help you manage your critical documents.

4. Efficient customer support and proven track record

No matter how effective or feature-packed virtual data room software is, if the providers don’t offer dependable customer support you will end up very frustrated. A dedicated customer support team that provides clients with rapid assistance should be the target for your company’s continuity. 

Also, a data room provider that has a good reputation in facilitating transactions within your industry is the way to go. An effective provider that has experience offering data room services to similar companies is exactly what you need for your startup.


In a nutshell, when you compare data room providers, you should always be focused on what they can do for you. A feature-packed VDR that doesn’t fulfill your clients’ needs is as useless as it is costly in the long term. 

So, when choosing a data room for startup, the price should be the last thing on your priorities. Only after surveying and meticulously selecting your preferred options with the information provided above, can you choose based on the cost.