The term “virtual data room” may initially sound like another fancy, new-age tech solution your company has neither the interest nor resources to implement.
We get it. In modern business, it’s challenging to filter out which tools are actually worth the investment. How about virtual data rooms?
Choosing the right virtual data room provider can be a game-changer for your business. The benefits – including sealing more deals and boosting efficiency – can quickly outweigh the initial investment.
Where, though, do virtual data rooms fit into everyday business functions? What are the real-world applications for virtual data rooms? Let’s highlight specific use cases of virtual data rooms along with the benefits attached to each.
First off, we’ll start with an overview of VDR technology.
A virtual data room (aka VDR) is a secure digital hub for storing and exchanging documents.
Think: convenient cloud storage + military-grade security = virtual data room
Information stored in a virtual data room becomes accessible to any authorized user from just about any device. Admins can control permissions as to who has access to what.
Virtual data rooms can deliver a high ROI because they streamline data management, enhance security, and improve in-house and external collaboration in one neat package. VDRs negate the need to send documents via mail and even email, allowing users to keep a much tighter rein on data while boosting the efficiency and compliance of just about any transaction.
How can you put VDR technology to work and let it do the heavy lifting for your organization?
Virtual Data Room Use Cases
Consider the impressive list of practical uses VDRs have to offer your operations:
Secure Document Sharing & Management
A VDR allows you to go beyond the vulnerabilities of basic cloud services and store your organization’s documents and sensitive data with confidence. Virtual data rooms are a practical and user-friendly solution for secure document storage and transfer. They offer a safe, simple, and secure way to manage documents.
“It’s amazing to analyze – how much data an organization passes across teams, clients, suppliers, and other stakeholders in a single day. If you think about it, the damage that can sprout from mishandling such amounts of data is hard to fathom. Hence, secure file sharing is an aspect of the business that must be handled with the responsibility it deserves,” advises GeeksforGeeks, an educational resource on computer sciences.
VDRs serve as an FTP alternative and can securely store confidential information, such as financial details (bank account information, tax documents, etc.), customer information (payment credentials, personal data, etc.), business transaction documents, research data, development plans, and more.
Once you upload a document, you retain full control over who is allowed to access the document. You may invite others to collaborate and benefit from features like configured notifications, versioning, Q&As, signing, watermarking, and more. You can generate a report detailing all downloads, uploads, views, comments, and edits for any document.
Benefits of Secure Document Sharing & Management via VDRs:
- Mitigate risks – Protect your company from the risks of file sharing through cloud services or email attachments.
- Leverage encryption – Get layers of security with 256-bit encryption in your corner.
- Easily revoke access – Quickly relinquish a user’s access to documents you no longer want them to view or edit.
- Boost credibility – Staff, suppliers, potential business partners, and customers will view your organization as one that prioritizes confidentiality.
- Promote collaboration – Streamline internal processes while promoting good business relationships with third parties and potential partners.
Demonstrating Legal Compliance & Due Diligence
Many industries are obligated to not only comply with extensive regulations but also be able to demonstrate legal compliance. Organizations must be perpetually audit-ready, with a full trail of document activities demonstrating due diligence.
VDRs provide a platform for simplifying and securing the document management SOPs of even the most complex organizations.
For example, lawyers or tax professionals may use a VDR to create a secure folder for each case, granting clients access to key documents and keeping everything confidential. Large organizations can securely store and organize documentation such as patents and copyrights, DBAs, incorporation documents, and tax paperwork.
Another sector that must have a secure method of document transfer and storage is the healthcare and biotech industries. These industries operate on strict deadlines, deal with sensitive data, and depend on efficient funding approvals. These industries need cutting-edge, highly secure technology to ensure compliance and deliver treatments and therapies on time.
Benefits of Legal Compliance & Due Diligence via VDRs:
- Adhere to best practices – Navigate the latest legal standards and align with current regulations.
- Keep all departments organized – Easily find what you’re looking for with customizable organizational structures to match your workflows.
- Stay audit-ready – Automatically track all document activity, views, and downloads. Generate a complete audit trail whenever the need arises.
- Control access and user roles – Grant users access to specific areas or documents within your workspace.
- Manage patents and intellectual property – Securely collaborate with brokers, lawyers, consultants, stakeholders, and more to protect intellectual property and manage patents.
Securing Financing
Raising capital is a crucial business function for any startup or expanding enterprise. When securing financing, organizations must provide potential investors and current stakeholders with a secure and user-friendly way to view current data and stay informed.
A Forbes article full of tips for raising capital notes, “You will need to demonstrate to potential investors your ability to manage the major components of your business—your money, collaborators, and operations, as well as the project itself—all at once.”
A system wrought with inefficiencies, redundancies, and a lack of transparency can quickly sour any deal. On the other hand, VDRs can equip a company to impress prospective investors with a refreshingly intuitive, organized, professional, and secure experience.
Benefits of Using VDRs for Securing Financing:
- Centralize documentation – Store all critical financial documents, including balance sheets, working capital assessments, payroll, financial forecasts, compliance documents, and more, in one secure hub.
- Promote privacy – Control whether or not users can view, download, or print a document. Revoke access at any time. These digital rights management (DRM) features protect your company’s sensitive financial data from falling into the wrong hands.
Facilitating Key Organizational Shifts
Major restructuring, mergers, bankruptcy, asset sales, and other shifts can be extremely stressful events in an organization’s history. However, a VDR can streamline the process and help save time, money, frustration, and missed opportunities.
Benefits of Using VDRs in the Following Scenarios:
- Bankruptcy and restructuring – VDRs can help keep sensitive data safe and ensure all stakeholders are on the same page throughout a restructuring or when filing for bankruptcy. A VDR platform provides the tools needed to collaborate efficiently and work through challenging Q&As as painlessly as possible.
- Asset sales and purchasing – VDRs serve as a centralized hub for providing critical data to inform prospective buyers, lawyers, brokers, colleagues, and other need-to-know users about the details of a sale. Whether the deal involves tangible or intangible property, using a VDR can simplify the sale, facilitate due diligence, promote communication, and keep the deal moving forward.
- Corporate mergers and acquisitions – VDRs can accelerate the notoriously complex M&A process by providing a centralized platform for executives, bankers, lawyers, accountants, consultants, and other key parties to collaborate securely and stay in the loop.
Asset & Tax Audit Management
A couple more stress-inducing terms include ‘audit’ and ‘taxes.’ Thankfully, VDRs are designed to consolidate all business records into one accessible hub, streamlining access and de-stressing the asset and tax audit management process. Plus, a fully auditable trail is kept for each document, showing edits, comments, views, downloads, and more. That way, the system is fully transparent for all relevant parties.
VDRs make year-end filing a breeze by giving you access to all legal and financial documents stored in a centralized, secure vault.
Benefits of Using VDRs for Asset & Tax Audit Management:
- Keep a pulse on all assets – Store documents detailing all company assets and transactions to simplify tax and legal compliance and conduct business confidently.
- Create customizable reports – Detailed reports are quick to generate and easy to read in the event of an in-house or external audit.
- Promote confidentiality and transparency – Lock down sensitive data while effortlessly keeping investors, board members, auditors, employees, legal counsel, and other key parties informed.
Project Management
VDRs are more than just secure document storage; they help your team get things done. Virtual data rooms facilitate project management by giving all departments access to your standard operating procedures and policies while furnishing them with the tools they need to work together toward your organization’s overarching goals.
“Project management is important because it helps ensure that projects are completed on time, within budget, and to the expected quality of work. It also helps identify and mitigate risks, manage resources effectively, and ensure stakeholders are well informed and involved throughout the project,” says National University in reference to the critical role of project managers.
Your company’s project management talent, and, by extension, your entire organization will benefit from employing cutting-edge VDR software to help promote efficient workflows.
For example, VDRs can help your organization establish an airtight protocol for handling a request for proposal (RFP). Managing documents on a centralized platform with activity tracking can help promote compliance and ensure professionalism. Then, you can grant bidders access to your proposal with complete confidence that all the boxes have been ticked.
Benefits of Using VDRs for Project Management:
- Promote inter-department cohesion – Get your HR, tax, accounting, purchasing, marketing, and any other departments you have working together and on the same page.
- Boost productivity – Keep projects moving forward with configured notifications when a user comments on a document. Help all team members and even relevant third-parties collaborate efficiently.
A VDR Solution for Both Startups and Enterprises
At the outset, we mentioned that organizations must choose their platform provider carefully to reap the full benefits of VDRs. CapLinked offers the top-level tech organizations need to seal deals faster.
Whether your company is in its fledgling stage or is a globally expanding enterprise, CapLinked offers a robust VDR solution that can scale and adapt to your organization’s needs. From everyday business transactions to complex regulatory compliance, our powerful virtual data rooms bring efficiency and security to every workflow.
For enterprises, we offer custom integrations, a collaborative document editor, and white-glove support. Even smaller companies can still benefit from many of our enterprise-level security features, including watermarking, digital rights management, and enforceable two-factor authentication (2FA).
Our competitive pricing makes our VDR solution a high-value, high-ROI choice. CapLinked is used by nearly half of all Fortune 1000 companies representing many industries, from finance to technology. Big names in our repertoire of clients include Microsoft and Thomson Reuters.
Start your free trial to see how CapLinked can level up the way your company does business.
