Your virtual data room provider may not be as secure as you think
These days, encrypting high-stakes documents simply isn’t enough. Here's how to go beyond a password when securing the business critical documents in your virtual data room.In a remote fundraising landscape, the virtual data room (VDR) is here to stay. Since their introduction into the space, virtual data room providers have been an important tool for safeguarding communication during the various stages of a deal, particularly when it comes to the due diligence phase. And with today’s technology, we can say that physical data rooms are a thing of the past as companies use virtual data rooms.
Here’s what you need to know about a virtual data room provider for sharing your confidential information, sensitive documents, financial information, M&A transaction files, rights management documents, intellectual property, and any other sensitive information or digital assets in a secure data room.
The state of virtual data room providers
Virtual data room providers like Intralinks and Merrill Datasite have been key legacy players when it comes to optimizing deal productivity and velocity. However, as insights into content consumption become more valuable to anyone in the final stages in a deal, these products often fall short
As we all know, a VDR or deal room is primarily used in order to ease both sides of a deal through due diligence, as the final step of a deal. Due diligence is a critical step across various industries and use cases. Whether it’s a matter of completing M&A deals, commercial property deals, fundraising deals, or pretty much any other type of deal.
The dreaded due diligence process often dominates discussions around the value of virtual data rooms. The reality, however, is that virtual data rooms can be a valuable tool for every step of the deal-making process—from prospecting to due diligence. (More on that in a bit!)
A winning approach to virtual data room software
As dependence on the virtual data room increases, document security rightfully remains the primary consideration when choosing a virtual data room provider. It’s hard to imagine an effective virtual data room that doesn’t offer at least password protection or basic document encryption. Without password protection, the unauthorized sharing of your documents is just a matter of time.
Moreover, it simply isn’t enough to have a one size fits all approach to protecting files in a virtual data room. It’s important to have customizability over the specific files you want to safeguard from unwanted third parties. For example, a startup founder might want to apply email authentication to their due diligence questionnaire, while setting an expiration date on their signed investment agreements.
The winning strategy when it comes to optimizing virtual data rooms is pairing secure document sharing with actionable document analytics. This pairing enables you to maintain control over the documents that matter to you while also prioritizing outreach to and follow-up with prospects who are more engaged.
Additionally, building relationships remotely can be a challenge for founders looking to form lasting impressions and secure funding from top venture capital firms. Modern data rooms should enable founders to strike the right tone through different engaging forms of content. Whether sharing short introductory videos recorded within a virtual data room, or uploading an image of a chart showcasing recent financial performance, founders should have the flexibility to choose the best content that articulates their story. And even more, founders should be able to have a say over how they want to protect their content.
Just as startups look to scale, so should their virtual data rooms. It should be simple for founders to replicate and personalize data rooms for each visitor. Many use third-party storage providers, like Dropbox, to create their visuals. Content stored in other places should automatically update all versions stored across virtual data rooms.
Let’s take a look at an example of what this looks like in the real world. Say Jessica has just kicked off the process of selling a company. She’s got to prospect, meet with, and develop relationships with prospective buyers. Using a virtual data room with sophisticated document security and document analytics solutions can accelerate and optimize each step of the M&A process by giving Jessica a portrait of who’s interested in the M&A deal and how interested they are, and perhaps even highlighting specific areas of interest or concern.
Intralinks & Merrill: Behind legacy virtual data room software
Legacy virtual data room companies like Intralinks and Merrill Datasite offer virtual data rooms that secure documents and (to a certain extent) track user engagement and performance.
Let’s start with a review of the document security measures Intralinks provides. Intralinks advertises “secure file sync and share, collaborative teamwork spaces, large-scale virtual data rooms and structured workflows.” Through Intralinks, you can provide access to encrypted materials without needed IT involvement through password protection.
Through their Insights Dashboard, Intralinks offers insights into document popularity and macro-level user activity. Using Intralinks’ Insights Dashboard, you can determine:
Which users have interacted with what content
Overall activity level of users and groups
Most popular documents at both the user and group level
The Merrill Datasite data room solution takes a similar approach to VDR data security and analytics. That is, Merrill Datasite provides “role-based security access controls with real-time and future staging of permissions.” Essentially, this functionality boils down to real-time, role-based document management.
On the document analytics side, Merrill Datasite enables you to track macro-level engagement by document, user, role, and Q&A activity. You can then export data and track these findings over time.
What legacy virtual data room software get wrong in securing documents
Document security pitfalls
Even with password protection and dynamic watermarking, you’re entrusting all the business materials in your virtual data room to each viewer. When you share documents with traditional data rooms, you’re effectively hoping for the best. If you rely solely on password protection, sharing your virtual data room is as easy as sharing the password.
For this reason, viewer verification is a must for virtual data rooms. Virtual data room software that offers viewer verification empowers you to require viewers to not only enter their email to access your VDR, but also click a link in a confirmation email to verify their identity. This can dramatically reduce the spread of the high-stakes materials in virtual data rooms.
When it comes to getting a general, unsophisticated feel for prospect interest, legacy virtual data room software may suffice. Intralinks and Merrill Datasite only offer general glances at document analytics across roles and segments. These document analytics begin and end at the VDR-level; they show you which document or documents dominated prospect engagement time.
Document analytics pitfalls
What these virtual data rooms don’t give you is an understanding of where prospects spent their time in your documents. Legacy virtual data rooms offer data that stops telling the story once prospects click on a document. You can’t truly figure out what’s driving prospect interest, never mind which assets and materials are performing and which aren’t. You need to know what’s commanding their attention within that deck, proposal, contract, or other asset.
These virtual data rooms also fail to identify key deal stakeholders you may not even know about. Tracking the links that have been forwarded to someone that you haven’t engaged with yet can provide valuable insights. Specifically, you can understand what’s in your contact(s)’s (and even other company stakeholders’) domains. Using these insights, you can perfectly tailor each conversation you have to each stakeholder.
Video pitfalls
The ability to save and send all types of files in one data room is a must-have for anyone wanting to increase deal velocity. Finalizing a transaction isn’t just a motion of sending decks for viewers to read anymore. Selling your vision to invested stakeholders involves uploading informational videos and showcasing big wins through visual images. A data room should work for you in the place where work happens. And these files might live across your cloud ecosystem, whether in Google Drive, Dropbox, or your local harddrive.
Other online data room providers fall short in that they don’t let you upload different file types beyond the standard PDF. Nowadays, strategically using asynchronous communication to your advantage is what it takes to finalize a deal. Additionally, you want to avoid manually reuploading your original files to your online data room, if you’ve made any changes. Online data rooms should give you the flexibility to upload the most accurate files in their original formats.
Where premier document security meets advanced document analytics
Legacy virtual data rooms like Intralinks and Merrill Datasite stop telling the story of your document analytics just when the story’s getting good. So, how can you use DocSend’s virtual data rooms to collect actionable, insightful document analytics without sacrificing document protection?
Let’s first review the virtual data room security and analytics offerings that accompany DocSend’s Advanced Plan. Specifically, the Advanced Plan enables you to build lightweight deal rooms to hold all documents pertaining to a deal. With DocSend’s Advanced Plan, you can:
Upload files like PDFs, videos, images, and more to your data room
Encrypt documents with advanced password protection. (Click here to learn how to send and track a secure PDF.)
Enable viewer access controls and viewer verification to add an extra layer of security to your links
Set expiration dates to have more oversight over document access
Easily watermark an entire document or all the documents within a Space
Enable or disable ability to download files
Assign tiered admin roles to manage internal collaboration and permissions in a secure manner
Request secure file transfers from third-parties
Make it mandatory for someone to sign an NDA or any agreement before viewing a confidential document
Collect real-time read and forward notifications
Access granular page-by-page insights on document performance
Gain advanced intelligence into document forwarding and viewer behaviors in a comprehensive dashboard
… and much more
Your virtual data provider and DocSend
How can you accomplish this for you and your business? First thing’s first, you’ll want to get started with DocSend—your first two weeks are completely free! You’ll then want to simply create a Space and add folders and content.
Once you’ve organized all the files you intend to send, you can watermark your documents, and create links with access controls and viewer verification to keep your shared documents even safer than those shared through legacy virtual data rooms.
Tracking engagement of your files with your virtual data room for your business
Now that your documents are share-ready, you can share them and track engagement on a document-by-document (and even page-by-page!) level.
How long did each viewer spend viewing the documents in your DocSend secure data room? Where in your Space (and within each viewed document) did they focus their time? To whom did they forward the Space? DocSend enables you to easily answer these and many more questions. All you have to do is consult the “Recent Activity”, “Performance”, and “Utilization” tabs of a given document.
What can you do with these newfound insights? The sky’s the limit. Perhaps you decide to prioritize your follow-up with leads that are engaging with your content but not formally responding. Perhaps you decide to refine your confidential documents and business materials based on the document metrics that matter to you and your team. (Then, you can upload your revised assets and compare engagement using DocSend’s version control feature.)
However you choose to apply this data to your dealmaking approach, DocSend’s document insights give you a valuable look at engagement during the most vulnerable points of a deal.
Companies and industries optimizing virtual data rooms at scale
Once you’ve built your first VDR in DocSend’s secure data room solution, you can easily duplicate it so you don’t have to manually create each data room. This will allow you to personalize, secure, and track engagement at scale. (In fact, when you upload a new version of a document in a given Space, it will automatically apply it to all Spaces!)
At the end of the day, you need a virtual data room that’s not only secure, but also actively working to give you an increasingly refined understanding of your prospects or clients and what they care about.