Data Room vs. Alternative Solutions – What Should Investors Choose

Data Room vs. Alternative Solutions

Investors work with people, and people are a huge amount of data and connections, so sooner or later, all organizations think about how to automate deal management using data room software. But some investors look for various cloud alternatives. So, what solution is more reliable?

Investment operations: where to exchange sensitive data?

The investor will decide to invest if he has reasonable grounds to believe that the project is feasible and will bring sufficient income. To convince him of this, a startup must organize a due diligence procedure where a large array of business-critical information is processed. Investors or companies should choose a secure digital platform for collaboration and file-sharing in this case. In this case, some choose file-sharing platforms like Dropbox, Citrix, or Google Drive, but others prefer using virtual data rooms striving for higher security.

The online data room software has the latest secure and well-organized collaboration tools. Instead of communicating via email or other insecure routes, data rooms help users communicate through the software messenger, group chats, public messages, audio and video calls, and Q&A modules (during business transactions). The online data room software has streamlined most business deals like mergers and acquisitions, capital or fundraising, initial public offerings, portfolio management, real estate transactions, and joint ventures. In addition, the data room allows investors to store ordinary files, data from the cloud, and web shortcuts – in a single space.

Virtual data room – the most secure solution for investors

The investor’s list of requirements is often very extensive, and processing it is time-consuming and labor-intensive. The founders should provide sufficient human resources early and consider this aspect when planning the financing round. In addition, it is advisable to continuously organize your documents in a document management system before a specific round of funding. It saves time and effort because a data room for due diligence can be derived from it anytime.

In addition, the platform is designed to ensure data security and prevent rape. Some vendors also use custom watermarks to protect information and prevent unauthorized use. The tools are also highly customizable and flexible.

Important data room features

The data room solution implements proven methods and has functionality that provides a full cycle of document processing at the enterprise. The software ensures the following functions for investors:

  • Guaranteed security. All transmitted data must be properly secured. Various methods can be used in this case – the EDS is considered the most effective. Accredited certification centers grant the right to use it.
  • Ensuring versioning. Each document resides in the system in many print runs and formats.
  • Faster search. Modern systems can find any material in a matter of seconds – you need to know only a small part of it.
  • Prompt generation of notifications. Auxiliary modules prepare reports on completed transactions promptly.
  • Providing integration with email. These tools allow you to transition from internal to external flow seamlessly.
  • Rational formation of storage and databases. Digital archives are built into almost all systems.
  • Organization of scanning and recognition of materials. Thus, a paper document is converted into an electronic one.
  • Providing information support at each level of work.

A document is created in the system based on a template or by copying an existing document (from a local file or email. Storing document images in the system facilitates their search, lets you get acquainted with the history of working with them, and views sets of documents related to a specific contract.