What is a Data Room?

A data room is a kind of virtual storage solution that provides secure storage for documents. It also provides a range of features to aid with due diligence. These features include annotations tools and granular access rights, activity tracking, and watermarking.

Data rooms are typically used to provide security documents to teams collaborative software clients (SOC 2 docs or compliance certificates) to aid due diligence. Sharing this information with other parties before the deal closes is a great method to speed up the due diligence process and decrease the risk.

Email is a method employed by companies to share SOC 2 documents as well as other documents. This isn’t just inefficient, it also causes problems with revision control. It’s also not secure, with the increasing number of emails that are a result of compromised mailboxes, stolen credentials, and phishing attacks.

Many secure file-sharing and storage solutions such as Box or Dropbox offer document availability on any device and at any location. While they provide a high degree of security, the majority of people or businesses require more than this. Important documents used for due diligence negotiation, fundraising or even negotiating deals must be stored and shared in software that offers more security levels than these personal file-sharing platforms.

The most important thing to ask about any “secure data room” is whether it restricts authorized users from sharing files with non-authorized users. Unfortunately, the answer is usually not. The majority of “secure data rooms” do not limit the number of times the same user credentials may be used to login to the system. People can easily re-use logins on their personal devices or copy and paste a link into the browser of a friend’s PC.