What is a Data Room?

A data room is a kind of virtual storage solution that gives you secure storage for documents. It also comes with a variety of features that help with due diligence. These include annotation tools and granular permissions, as well as activity tracking and watermarking.

The most common use of a data room is to share security documents (SOC 2 documents, compliance certifications, etc) with clients to support the due diligence process. This is a great way to speed up the process and decrease risk by sharing the information with third parties prior to the close of the deal.

Email is a method used by companies to share SOC 2 documents as well as other documents. While this works it is inefficient and leads to problems with version control. This is also insecure, due to the rise in emails that are a result of compromised mailboxes, stolen credentials and phishing exploits.

Many secure storage and file sharing services like Box and Dropbox, offer document accessibility on any device or in any location. While they provide a good level of security, many businesses or individuals require more than this. sensitive documents that are used to conduct due diligence, fundraising or negotiating deals must be stored and shared in software that provides higher levels of security protection than the personal file-sharing software.

The most important question to ask any «secure data room’ is: does it prevent authorized users from sharing documents with non-authorized users? Unfortunately the answer is generally «no». Most’secure data rooms’ don’t even limit how many times the same user’s credentials can be used to access the system. It is easy for people to re-use logins they have created on their own devices, or copy and paste the link into a browser on a friend’s computer.

data room protecion

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