A data room is a storage option for electronic files that lets documents be stored in a secure environment. It also comes with a variety of features that help with due diligence. These include annotation tools that allow for granular access, watermarking and activity tracking.

A typical use of data rooms is to share security documents (SOC 2 documents, compliance certifications, etc) with clients in order to facilitate the due diligence process. This is a great method to accelerate the process and reduce here are the findings risk by sharing this information with other parties before the deal is complete.

Traditionally, companies have utilized email to share SOC 2 docs and other documents. This is not only inefficient, it also causes problems with revision control. It’s also vulnerable as email-related attacks are increasing, which can lead to compromised inboxes, stolen credentials, and phishing exploits.

Many secure file sharing and storage solutions, such as Box and Dropbox allow access to documents on any device and any location. They provide a high degree of security, however most businesses and individuals need more. Important documents used for due diligence negotiation, fundraising or even negotiating deals should be saved and shared in software that has higher levels of security protection than these personal file-sharing platforms.

The most important question to ask any “secure data room’ is, does it prohibit authorized users from sharing documents with non-authorized users? Unfortunately, the answer is typically “no”. The majority of “secure data rooms” do not restrict the number of times same user credentials may be used to login to the system. People can easily re-use logins on their personal devices, or copy and paste links into the browser of a friend’s PC.