By using virtual data rooms companies are able to easily share information with third parties, including potential investors and venture capital firms. This type of interaction typically involves due diligence which requires access business documents from a third party to assess the possibility of investing.
VDRs are now a standard method of sharing confidential documents during M&A, intellectual property transactions and litigation. Private equity funds and hedge fund use them to share information and files with their limited partners as well as portfolio companies.
Other industries can benefit from the use of a VDR to manage sensitive documents and collaborate. Life science (biotech/pharma) companies for instance, typically require sharing confidential information with third-party partners during the formation of partnerships as well as raising capital, and they require a secure platform to accomplish this.
A virtual data room could cut the cost of due diligence by reducing photocopying indexing, travel and other expenses. They also allow businesses to cast a wider web of potential buyers by making it easier for them to take part in the process no matter where they are and they enable more efficient collaboration by providing a central point for team members and partners to connect. Through integration with existing systems, VDRs also support real-time communication and could in reducing the need for lengthy emails.