What Is VDR? Meaning and Use Cases

    Back in the day, information was stored in diskettes and hard drives, but as technology advanced so did storage devices. VDRs (Virtual Data Rooms) are the latest outcome of this digitization process, which provides a more secure option to using a standard cloud service.

    If you’re just discovering data rooms, learn how your company can benefit from using them.

    What is VDR?

    A virtual data room is a safe online database where companies can store sensitive information. It is a secure online repository employees can obtain essential information from. It serves as a controlled environment where users can share critical business information with investors, clients, and company leadership.

    On the surface, an online data room may be offering services similar to that of cloud storage tools, but in fact it is way more advanced. The level of performance you get from a VDR is largely dependent on your preferred virtual data room software, aka a data room provider of your choice.

    VDR’s major benefit is how much more secure its processes are thanks to the data center certifications, auditing and compliance, physical, app, and infrastructure security.

    Characteristics of virtual data rooms

    Feature set is what makes a virtual data room completely different from a cloud storage solution. See for yourself.

    1. Document control

    A functional data room assures total control and integrity of sensitive documents as you share them with third parties. A proper data room software makes use of enterprise-grade security, which is effective even on devices beyond the company’s IT radar. Whether installed in Windows or iOS, the security technology will always be applied uniformly.

    2. Monitoring of user activity

    A good virtual data room should offer page-level tracking which lets you know who’s seen what, the time, date, and for how long. With fully-functional user activity monitoring, you generate detailed audit trails.

    You can also gain insightful business IQ concerning the document review progress of the user. It keeps you in the loop about the mindset of your employees and helps you stay proactive.

    3. Seamless tech integration

    Due to the fluid nature of corporations today, a proper VDR should offer a variety of solutions for easy incorporation into existing business processes. It should also offer a flexible web service API. With it you can create, configure, and control the electronic data room.


    Always look for the capability to utilize single sign-on and embeddable widgets so you can launch at a single click.

    4. Content organization and presentation

    Data room providers make it easy and intuitive to compile your documents in a structured, organized manner which enables efficient processes. It is advisable to get a VDR that allows for using various tags in addition to the traditional folder structure. This way, instead of paying extra costs for additional file copies, you just have to simply tag the file with multiple categories.

    5. Accelerated document preparation and review

    One of the major advantages of virtual data rooms is observed during major events. It helps compress the timeline thus improving speed and boosting efficiency. The best virtual data rooms should let you swiftly set up and maintain your site stress-free, with no need for all the clicking. During periods of change, it smoothens the administrative processes and keeps everything ticking.

    6. Secure and reliable cloud infrastructure

    During a virtual data room comparison, look for servers that are located at global centers and are hosted by quality service providers. They provide comprehensive security and reliability to ensure that your company details remain within the company. This is something that standard cloud services can’t offer because unlike VDRs, they don’t offer a local database.

    Use cases of virtual data rooms

    Some several sectors and industries utilize the extensive powers of modern VDRs, they include;

    •   Investment banking: Investment bankers are one of the most common users of data rooms. They use it to accommodate the large amount of information sharing during processes like capital raisings and IPOs.
    •   Life sciences: In the life sciences industry, most companies attribute a vast majority of their worth to their IP. Data security is paramount in companies like this. Sensitive processes from licensing IP and patient file storage to HIPAA compliance and clinical trial results are much more secure with virtual data rooms.
    •   Technology industry: VDRs have a very loyal supporter and advocate in those in the tech sector. This is because they can now share information among teams spread across several continents and facilitate innovation, thanks to online data rooms.
    •       Private equity and venture capital: In these types of firms, organization is key because there are usually several deals in the works at the same time. VDRs are capable of handling these mammoth quantities of data simultaneously, helping these companies stay on top of the process.
    •   Legal industry: When it comes to paper works and documentation, you’ll agree that no one compares to the barristers. This is why they were one of the first to jump on the VDR trend and it’s paying high dividends already. The legal industry is now in transition from file cabinets to centralized, streamlined online sharing.


    Virtual data rooms are gaining huge popularity because they are making lives better, cutting down processing speed in every endeavor it is utilized for. Major corporations and conglomerates with hundreds or thousands of employees are the major benefactors of this secure digitalization of information.

     Supported by mobile devices like laptops and smartphones, this ease of access opens room for increased efficiency.

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