How to Choose the Right Data Room Provider for Your Needs?

Whether it is an M&A transaction, fundraising, or regular data management, the importance of selecting the right virtual data room provider is paramount. For starters, the virtual data room providers you choose will be responsible for protecting your secretive corporate information, and it would be unwise to hand it over to an amateur vendor.

There are a large number of data room providers serving regional and global markets. However, even after having a multitude of options, you cannot trust every vendor in the data room market. The problem intensifies for small business owners or entrepreneurs who are new to virtual data room technology.

Here are key factors to consider when choosing the right virtual data room provider for your needs.

Although virtual data rooms have been in the game for almost two decades, the technology truly gained fame in the business fraternity in the last five years or so. The growing demand for VDRs created opportunities for data room startups, so most of the data room vendors currently operating have minimum experience.

Why does experience matter in data room services? Virtual data room vendors have shifted from generic services to industry-specific operations. For example, vendors specializing in M&As offer a tailor-made m&a virtual data room. Similarly, there are dedicated VDR services for the legal industry, healthcare, board communications, IT, telecommunications, etc.

Vendors with experience in a particular sector have a better understanding of industry-related challenges; they are better equipped to overcome such hurdles.

What are the chances of a Saas company having no digital presence? The rapidly growing data room market has also enticed fraudsters, and inexperienced buyers can easily fall into their traps.

You can start by checking their digital presence. For example, if there are customer reviews on their website, you can track those customers and personally inquire about the services. Fake vendors usually share bogus, untraceable reviews.

Second, you can visit their social media profiles and see what people say about their services. Lastly, you can turn to trusted online data room software review websites and check your potential vendors’ ratings.

Here comes one of the most important elements in the selection process. Data room software is an online document repository that you can use to manage or share information, streamline internal and external communication, and carry out business transactions.

However, it is important to note that data rooms are not simple cloud-storage platforms like Dropbox. They are hosted by certified VDR service providers, and this is what you must consider when choosing a VDR vendor.

Generally, there are two types of certifications—regional and global. Regional certifications are mandatory for vendors to operate in a specific country or region. For example, an M&A virtual data room vendor in the US must be FINRA-certified.

Similarly, electronic data room services operating in the public healthcare industry in the US should be HIPAA-certified. Apart from that, notable international certifications include ISO and GDPR.

Security is the primary factor and selling point in the data room industry. That’s because the majority of data room buyers use the technology to share critical information during due diligence, fundraising, M&As, etc.

Even if you aren’t buying a virtual data room for above mentioned uses, it is still vital to choose a secure data room. Here are some important security features to look for.

Two-step Verification

Although it is a basic one, two-step verification is a great way to minimize the chances of unauthorized logins. The process requires the VDR users to use the correct credentials at two different steps to log into the data room.

Remote Device Purging

It allows the administration in the data room to immediately remove any device (if found in suspicious activities) and the data inside it.

Document Access Controls

Virtual data rooms have strong internal security mechanisms. You can define the access level for every individual user in the data room. It may include accessing, removing, deleting, editing, sharing, or printing any file.

Digital Watermarks

Digital watermarks prevent documents from copyright attacks. What’s more, you can track any changes or actions performed on watermarked files.

Fence-view Mode

Fence-view mode is a highly important feature when it comes to external data sharing. Using fence-view mode, you can hide any section, part, or sentence in your document.

Last but not least, a true analysis of customer support service is mandatory in any data room comparison. You would want a knowledgeable customer care unit that responds immediately and can be accessed through various routes like email, phone calls, social media profiles, etc.

Final Words

Hiring a virtual data room vendor is equivalent to entrusting your corporate secrets to someone else. Therefore, it is important to hire a trusted data room service provider. Addressing the above-mentioned factors will help you make informed decisions. Some of the best data rooms to look for include iDeals, Ansarada, ShareVault, Merrill, and CapLinked.