UNITED STATES—As companies increasingly transition to virtual workspaces and conduct a significant portion of their operations online, the importance of virtual data rooms (VDRs) cannot be overstated.

These secure online repositories have emerged as essential tools for facilitating due diligence, data sharing, and collaboration during critical business processes such as mergers and acquisitions, fundraising, audits, and more.

In this article, we’ll delve into the significance of online data room software and outline the key criteria for evaluating the best data rooms in the market.

The rise of virtual data rooms

Traditionally, physical data room vendors were employed for the confidential sharing of sensitive information during business transactions. However, the limitations and inefficiencies of these physical spaces became apparent as technology advanced.

Virtual data rooms emerged as a solution to these challenges, revolutionizing the way sensitive data is managed and shared.

  • A virtual data room is a secure online platform that provides a controlled environment for the exchange and storage of confidential information. Its versatility extends beyond transactions to various industries and sectors where data security and controlled access are crucial.

Key criteria for evaluating VDR providers

As the demand for VDRs grows, so does the market. According to Statista, the electronic data room market is expected to reach $3.66 billion of sales value by 2027.

As the market is growing, so is the number of various providers offering differing levels of service and security. Choosing the right VDR provider is a crucial decision that can significantly impact the success of a transaction or project.

  • Due diligence is among the most frequent use cases of a data room, and choosing a provider for this particular deal type is a meticulous and complex process.

To ensure the success of the selection process, it’s critical to have the right criteria to compare virtual data rooms effectively.

According to Gilbert Waters, Co-founder and marketing specialist, “It is essential to pay attention to data room security, activity tracking, document management, and collaboration functionality. These groups of features play the most important role in successful dealmaking.” With that being said, to choose from the top data rooms for due diligence, consider the following feature groups:

1. Advanced security protocols

The most important security features each virtual data room should have include:

  • Data encryption: Robust encryption ensures that sensitive information remains confidential and secure throughout the due diligence process.
  • Access controls: Granular access permissions allow administrators to control who can view, edit, or download documents, ensuring that only authorized parties have access.
  • Watermarking and dynamic view: Watermarking documents with dynamic user identifiers discourages unauthorized sharing and enhances document traceability.

2. User activity tracking

Activity tracking features provide control over all type of interactions within the data room:

  • Auditing capabilities: Detailed logs of user actions, including document views, downloads, and interactions, offer transparency and accountability.
  • Q&A tracking: Monitoring questions asked by users and responses provided can provide insights into key areas of interest.

3. Efficient document management

For controlled and efficient document management, virtual data rooms offer a wide range of features, such as:

  • Version control: Ensures that all stakeholders are working with the most current version of documents, avoiding confusion and errors.
  • Folder structure: An organized folder structure makes it easy for users to locate specific documents and sections, streamlining the due diligence process.
  • Bulk upload and download: The ability to upload and download multiple documents at once saves time and enhances efficiency.

4. Collaboration tools

For seamless collaboration, data rooms offer the ability to edit documents online, leave comments, and securely communicate via the platform:

  • Real-time editing: Collaborators can work together to edit documents in real time, facilitating collaborative analysis and decision-making.
  • Annotations and comments: Users can highlight key information, ask questions, and leave comments directly on documents for clearer communication.

5. Search and retrieval

For ease of retrieving any necessary information from the data room, these tools offer:

  • Advanced search: A powerful search function allows users to quickly find specific keywords or phrases within a vast repository of documents.
  • Full-text search: Searching within document content aids in pinpointing relevant information hidden within files.

6. Bulk actions

Bulk actions save lots of time, while making it easier and more efficient to use the platform:

  • Bulk download: Users can download multiple documents simultaneously, saving time when extracting information for offline analysis.
  • Bulk printing: For situations requiring hard copies, the ability to print multiple documents at once is beneficial.

7. Accessibility and compatibility

Unlike physical data rooms, virtual solutions offer the ease of accessibility at any time and from any device:

  • Cross-device compatibility: The VDR should be accessible on various devices, including desktops, tablets, and smartphones, ensuring flexibility for users.
  • Cross-browser compatibility: Compatibility with popular web browsers enhances user accessibility and avoids technical issues.

8. User-friendly interface

While no data room is similar, each offers a user-friendly, intuitive interface:

  • Intuitive navigation: A user-friendly interface ensures that participants can quickly learn how to use the platform, reducing the learning curve.
  • Dashboard customization: Users should be able to customize their dashboard for personalized access to frequently used documents and features.

9. Data analytics and reporting

For rich insights on documents interaction, data rooms offer unique reporting and analytics capabilities:

  • Document analytics: Insights into which documents are most viewed, downloaded, or interacted with can provide valuable data about areas of interest.
  • User engagement reports: Understanding user behavior helps identify engaged stakeholders and their level of interest.

10. Customer support

Last but not least, virtual data rooms offer guidance throughout the entire user journey — from setup to first steps with the platform and resolution of any issues that may arise:

  • Responsive support: Access to timely customer support can address technical issues and questions promptly, ensuring a smooth due diligence process.
  • User training: Providers that offer training sessions can help users maximize the potential of the VDR and its features.

A robust virtual data room equipped with these essential features empowers businesses to conduct comprehensive due diligence and many other deal types efficiently and securely.

Each feature contributes to enhancing transparency, collaboration, and information accessibility, thereby ensuring that stakeholders can make well-informed decisions based on accurate and relevant data.


In the era of digital business, data room services have become indispensable tools for secure data management and efficient collaboration. Their role in enabling successful transactions and projects cannot be understated.

When evaluating the best virtual data room providers in the market, it’s crucial to consider factors such as security measures, activity tracking, document management, collaboration, search, and some others. By carefully assessing these criteria during your data room review, you can make informed decisions that align with your specific needs and ensure the success of your critical operations.