What is a Data Room?


A data room is an electronic storage solution that allows documents to be stored in a safe environment. It also comes with a host of features that assist with the due diligence. These tools include annotations as well as granular access permissions watermarking, and activity tracking.

Data rooms are often used to share security documents with clients (SOC 2 documents or compliance certifications) in order to facilitate due diligence. Sharing this information with other parties prior to the deal closes is a great way to accelerate the due diligence process and lower the risk.

Email is a method used by companies to share SOC 2 documents and other documents. While this is effective, it is inefficient and causes problems with version control. It’s also vulnerable with attacks on email on the rise resulting in compromised inboxes and credentials being stolen, as well as phishing exploits.

Many secure storage and file sharing services like Box and Dropbox provide access to documents from any device and in any location. Although they offer a decent level of security, most businesses or individuals require more than this. sensitive documents that are used to conduct due diligence and fundraising, or for negotiating deals should be saved and shared in software that offers higher levels of security than these personal file-sharing systems.

The most important question you should ask any’secure data room’ is does it stop authorized users from sharing documents with non-authorized users? Unfortunately, the answer is typically “no”. The majority of “secure data rooms” do not limit the number of times that the same user credentials may be used to log into the system. It is simple for users to re-use logins they have created on their personal devices or copy and paste the URL into the browser on a friend’s computer.

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