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Your Detailed Guide to Virtual Data Rooms and How to Use Them

Teamwork

Sep 12, 2022
12 Min

Your Detailed Guide to Virtual Data Rooms and How to Use Them

Are you looking for a way to protect sensitive data and documents while allowing authorized users to access it? Do you want to make sure that only the right people get access to your company’s most valuable documents and information?

In the past, companies would store their most important documents in physical files, safes, and vaults. These days, with so much emphasis placed on security, confidentiality, and global accessibility, virtual data rooms are becoming increasingly popular as a secure alternative to share documents.

Virtual data rooms allow businesses to securely share confidential documents and files with clients, potential buyers, partners, employees, and others. By using a virtual data room, you can ensure that only the required people can access documents, and minimize the risk of exposing sensitive information.

This article includes what you need to know about how to set up and use a virtual data room. You’ll learn how to choose the right type of virtual data room for your needs and how to manage your data or documents once it’s stored inside the virtual data room.

What is a Virtual Data Room?

Virtual data rooms are online databases for storing documents or sensitive information. They’re great for protecting confidential documents, financial records, intellectual property, and other important files. Virtual data rooms are secure because they’re stored offsite and accessed via the internet.

Companies use virtual data rooms when they need to share large volumes of sensitive data or documents with multiple parties. Companies also use virtual data rooms because they’re secure, convenient, easy to set up, and cost effective. They’re great for keeping documents private when sharing them with third parties or when you need to conduct secure transactions.

What Are the Most Popular Uses of Virtual Data Rooms?

Virtual data rooms are used by companies to protect confidential documents and trade secrets.

Here are some examples of popular uses of virtual data rooms:

Document sharing between employees.
Sharing documents with vendors and contractors.
Keeping documents secure from hackers and thieves.
Reducing the use of physical documents and saving money.
Storing and managing documents.
Maintaining corporate archived documents.
Making it easy to find and retrieve documents.
Providing an audit trail for better document control.

Physical Data Rooms Versus Virtual Data Rooms

Companies use virtual data rooms because physical data rooms are expensive and cumbersome. Physical data rooms require a secure place, security, and staff. They’re also not available 24/7, which means you may not be able to access documents outside normal working hours.

Virtual data rooms are accessible anytime. Companies can set them up quickly and easily as they’re usually hosted on cloud servers.

While there are many benefits to using a virtual data room over a physical data room, there are some drawbacks, too.

Here are five things to consider before deciding whether to use a virtual data room instead of a physical data room.

1. Security

While a virtual data room may be safer than a physical data room, it doesn’t offer the same level of protection for your data or documents. An attacker who gains access to your virtual data room might steal your company’s most valuable data or documents.

2. Accessibility

If you decide to host your virtual data room on-premises, you must purchase hardware and install software. This requires time and resources. If you host your virtual data rooms on a cloud server, you don’t have to worry about any of this. Also, a virtual data room isn’t as convenient as a physical data room. To access your data and documents, you must log onto a secure web portal, download a document, open it, and view its contents.

3. Reliability

A virtual data room is less reliable than a physical data room. For example, a virtual data room might crash due to network issues, power outages, or malware infections. A physical data room will always be available when you need to access your documents.

4. Control

With a physical data room, you control where the documents are kept. With a virtual data room, you don’t have the option to control the location of your documents. Also, your storage capacity is limited by the amount of space allotted to you. So, if you exceed this limit, you won’t be able to add any additional documents unless you delete existing ones or upgrade your storage.

5. Ease of sharing

Sending a document via email is faster and simpler than sending it through physical means. However, sharing a document via email requires that everyone involved have access to the recipient’s email address.

How to Find a Perfect Data Room?

Virtual data rooms are great for sharing financial data, intellectual property, and other sensitive documents. The process of finding the right virtual data room provider isn’t always easy.

So, how do you find the perfect one?

First, ask yourself these questions:

What type of data room do I need and for how many users?
Do I need a physical location, or can I use online data rooms instead?
Do I need a secure data room, or can I use a public data room instead?
Is this a short-term project, or am I looking at a long-term contract?
What features should I consider?
What type of documents do I want to store?

Once you’ve answered those questions, you’ll be ready to search for your perfect data room provider.

Here are some tips to help you find the perfect match.

Search for terms online like “data room” and “virtual data room.”
Research a few and read reviews from previous customers. Look for positive feedback about the provider’s customer service, pricing, privacy policy, and overall experience.
Call the provider’s customer support team to speak with a representative.
Read through any contract document before signing it and be mindful of all fees and hidden costs.
Always read the fine print in any document and do your due diligence.

Which Functions Do Virtual Data Rooms Offer?

Virtual data rooms aren’t just for storing sensitive documents or information. Besides securing and sharing confidential documents, they’re also great tools for communicating between employees, partners, sellers, and clients.

Here are some of the most popular features offered by virtual data rooms.

Secure Communication – The ability to send secure messages through email, chat, phone calls, and video conferencing. This feature allows users to share confidential documents with others without worrying about being hacked or having their emails intercepted.
Document Management – The ability to create, edit, and save documents within a secured environment. Users can access these documents at any time and place, making them accessible when needed.
File Sharing – The ability to upload and download documents to and from a server. Files or documents can be shared with anyone who needs access to them.
Security Monitoring – The ability to monitor activity within a virtual data room.
Audit Trail – The ability to record every action taken within a virtual data room, allowing administrators to view activity logs. This helps security experts to identify risks early and put measures in place to address them.

How Secure Are Virtual Data Rooms?

While virtual data rooms are convenient because they allow businesses to communicate and share documents securely over the internet, there are risks involved. So, how secure are virtual data rooms?

Here are factors to be aware of.

Most virtual data rooms use encryption technology to protect stored data or documents. Encryption scrambles data, so no one can read your documents unless they have the correct decryption code. This makes virtual data rooms very safe because only authorized users can view the data or documents stored inside.
Virtual data rooms are usually hosted on servers. So, if hackers gain access to those servers, they could view your documents or steal your information.
Virtual data rooms are typically password protected. If someone breaks into your server, they won’t be allowed to access the documents stored inside.
Virtual data rooms are not intended to replace physical storage facilities. If your company loses its physical data room, it still needs to keep storing sensitive documents somewhere.
Virtual data rooms aren’t meant to replace physical security measures. If your office building burns down, you still need to take precautions to secure your most important documents and data.

What Should I Consider When Choosing a Data Room?

Choosing a virtual data room is a critical decision because it’s where you store sensitive documents and information. Here are some things to consider:

What type of security does the company offer?
Do they use strong encryption algorithms?
Are there any third party audits available?
Can you access the data room and your information or documents 24/7?
Can you get a free trial period or a demo account?
What features does the virtual data room offer?
Does the host have a support team or provide training documents?
How often is data backed up?
Can you view your documents online via a web portal?

How Much Information Does a Data Room Hold?

Companies use virtual data rooms because they’re convenient, secure, and cost effective. However, some businesses find them too expensive, especially if they hold large volumes of data or lots of documents. So, how much information does a virtual data room hold?

That depends on several factors, such as:

The type of data being stored and whether they’re just documents or other types of files.
The number of users accessing the data or documents.
If the company uses encryption technology.

If you’re storing financial documents, for instance, you can hold more records in a single virtual data room.

The more users access the data, the more space you’ll need. If you’re storing a lot of user-generated content, such as photos, videos, and audio files, you’ll need a lot more storage than if you were just sharing documents.

If you plan to store large amounts of data, consider upgrading to a cloud-based solution. Cloud-based solutions offer unlimited storage capacity, making them ideal for storing large volumes of data beyond just documents. They also allow you to easily scale up or down, depending on your needs.

Who Can I Invite to My Virtual Data Room?

Who to invite to your virtual data room depends on the type of company you run.

If you’re running a small business, you may not need to invite anyone at all. If you’re running a large company, you’ll want to invite those who are essential to your success.

Here are some tips for inviting participants to your virtual data room.

Set up a secure connection between your computer and the virtual data room. This ensures that only those authorized to access the virtual data room can view its contents or documents.
Have a document with the attendee’s details. Include names, email addresses, phone numbers, and any other relevant details.
Send invitations via email. Include a link to the virtual data room.
Create a document to keep track of who accepts your invitation.
Provide any training needed to help users know how to use it. If helpful, create training documents or processes for your users.

The Importance of Data Rooms

Companies use virtual data rooms when they need to exchange sensitive information and confidential documents with partners, suppliers, investors, or employees. The process usually involves sending documents via email attachments, which makes it hard to keep track of who sent what and when.

Virtual data rooms solve this problem by providing secure online storage space for documents and files. Companies can send these documents to each other through a private link, making it easy to access and view them at any time.

When you create a data room, you can invite anyone you want to participate. This includes clients, vendors, investors, and employees. Once everyone has been invited, you can set up rules for sharing documents and information.

Once you’ve created your data room, you can add participants and assign roles to specific individuals. Participants can log in to the data room and view documents, edit them, and upload new ones.

Nimbus Platform as a Virtual Data Room Provider

You can use Nimbus Platform as a virtual data room as it offers:

Many options to structure your information. You can structure your data by organization, team, or projects, and create workspaces and folders to organize your documents.
Generous cloud storage levels based on the number of users.
Password protection for your notes, which means only those with access can view documents.
Option to invite users according to workspaces and folders, which makes it easier to control access levels and provides greater security.
And so much more.

To find out more and to try Nimbus Platform on a free trial, visit this website.

In conclusion, virtual data rooms have become increasingly popular over the past few years. They offer companies many advantages, including cost savings, increased security, and greater flexibility than traditional methods of document storage.

Before you jump into using one, here are a few questions you should ask yourself first: Do you really need a virtual data room? What kind of data or documents will you store in it? And most importantly, why would anyone use it? Once you answer those questions, you’ll be able to determine if a virtual data room is right for you.

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