In recent times, Virtual Data Rooms (VDRs) have seen a huge growth in the Business Industry. Business Companies have started to recognise how helpful VDRs are. Due to VDRs numerous features more and more businesses have started using them.
Businesses are attracted to VDRs because of its privacy feature. In 2018, the General Data Protection Regulation, also known as GDPR, was introduced in the European Union which changed how your private data is handled online. Business involves a lot of sensitive documents. Virtual Data Rooms helps to keep your data safe.
In this article, you will know why data rooms are important for a business.
Virtual Data Rooms
A VDR (Virtual Data Room) is used by businesses to store critical business-related data and files for sharing and backing up. Businesses which depend upon their important paperwork need to keep their data safe and prevent it from falling into wrong hands. VDR is a safe online database to upload and store your business-related sensitive information.
In a Virtual Data Room, you can host different business activities like M&A transactions, IPO, fundraising, audits, IP management, strategic partnerships and more. You can upload and manage all of your data in one place. So, no more worrying about where you uploaded the file.
General Data Protection Regulation
As we mentioned earlier, GDPR is the data protection legislation of the European Union which was put into effect on 2018. It contains the fundamental principles of data protection.
Since this law came into effect, personal data must be processed in a fair, lawful manner which is transparent to the data subject. In a Virtual Data Room, both seller and buyers need to comply with GDPR when doing any exchange related which includes information about seller’s employees, customers, clients, and contractors.
Let us see why the data rooms are important for business.
- Give access to people from anywhere in the world
In Business, many times files and data are required to be shared among co-workers, staffs, and investors. With VDR, it is easy to share documents. It does not matter if a business is in the EU or not, GDPR applies to businesses regardless of whether they process data in the European Union or not.
However, EU or non-EU bidders whoever wants to access data in VDR are under EU data protection laws. When the law came into effect, it made clear that personal data should not be sent to foreign countries until necessary safety.
Safe Data Rooms have their security and protection to prevent any crucial data from falling. Secure Data Rooms ensures your data and privacy are safe during any transaction with a third party even if the party is from a foreign country.
- VDR complies with International Regulations
There are regional regulations such as GDPR, CCPA and HIPAA which can hinder international transactions and deals. This can negatively affect your business.
Using VDR, Companies can process data subject in a lawful manner which complies with the International Regulations. The GDPR requires companies to agree and stick to the data protection principles. Using VDR, Companies can make sure of that.
- Safety and Security
Security is one of the top concerns for businesses and Virtual Data Rooms is one of the secure systems available online. The owner has full control over the files in a VDR. Only the owner can only give or restrict access to files.
The owner can keep track of who accesses the files when did they access it and what are they doing in a data room. Due to high security, it complies with GDPR and makes sure data is handled securely. The companies and organisations should take the right measure to prevent any unauthorized process which can lead to data loss or deletion.
- Improves Due Diligence
VDR provides efficient and effective due diligence. There is no need for parties to meet face to face, instead, they can review documents and discuss them in a virtual data room. VDR allows companies to check documentations and do a risk assessment in a controlled environment. It complies with the GDPR principle processing data in a fair, lawful, and transparent manner.
In the age of GDPR, the data room is key for VCs
Never has it been so easy to not comply with ever stricter data laws and with the passing of GDPR into UK law and general tightening of data laws across the globe one area that is going through turbulence with often 2.0 legacy systems are venture capital firms who have to complete due diligence on multiple companies with all parties complying to ever-tougher data laws.
So with that in mind let’s look at some of the best data room providers out there starting with five of the best operating and providing secure data rooms for VCs completing M&As and due diligence processes in the UK;
- Citrix is a cloud-based secure environment for your most complex and confidential business deals to make important info accessible
- Datasites the only secure environment with redaction built-in.
- Caplinked makes it faster and easier to manage business transactions in the cloud.
- Sterling has powered some of the world’s biggest deals
- Imprima claims to be the only AI-Powered, M&A due diligence platform to cater for deal preparation, Vendor Due Diligence, VDR and Post-Merger Integration.
Although it’s very hard to feel sympathy for VCs many have been impacted by reliance on legacy tech and are now scrambling to update their systems. Quite ironic considering they often invest in high tech and live in an ecosystem of fast and powerful software!