What is a Data Room?

A data room is an electronic storage solution that allows documents to be kept in a secure environment. It also offers a number of features that assist with the due diligence. These include annotation tools as well as granular access permissions watermarking, and activity tracking.

A typical use for a data room is to share security documents (SOC 2 docs as well as compliance certificates,) with clients to support the due diligence process. Sharing the information with other parties before the deal closes is a great method to accelerate the due diligence process and lower the risk.

Email is used by companies to share SOC 2 documents as well as other documents. While this works, it is inefficient and can lead to problems with controlling versions. It’s also not secure, due to the rise in emails that are a result of compromised mailboxes, stolen credentials and phishing exploits.

Many secure storage and file sharing solutions like Box or Dropbox provide access to documents on any device and at any location. While they provide a high level of security, most businesses or individuals require more than this. Documents that are sensitive and are used to raise funds, due diligence or negotiating contracts should be stored in software that has higher levels of protection.

The most important thing to inquire about any „secure data room” is whether it prevents authorized users from sharing files with unauthorized people. Unfortunately, the answer is typically „no”. The majority of „secure data rooms” do not restrict the number of times the same user’s credentials can be used to log into the system. Users can use logins on their devices or copy and datazoning.net/how-are-virtual-data-rooms-protected-from-sudden-blackouts paste an URL into the browser of a friend’s computer.