A data room or virtual dataroom (VDR) is central location in which businesses can share sensitive documents. It allows attorneys, accounting professionals internal and external insurance adjusters and regulators access to all the information in one location, without needing to contact or email. VDRs can also minimize the risk that crucial documents are compromised during transit.

VDRs are employed in many sectors and industries. However they are usually used to perform due diligence when selling an enterprise. During this process the seller and their advisors would upload their documents to the VDR and then let prospective buyers to view the documents in a secure location. The documents could be viewed by one buyer, or by a number of buyers. However, it is important that each user only has access to the files to which they have been granted access.

Utilizing VDRs VDR to speed up the fundraising process helps startups impress their investors by providing them with all the necessary information and financial metrics they will require. It also allows investors to advance the deal quickly and efficiently this is a significant advantage for both sides.

Some VCs and entrepreneurs question the worthiness of the concept and argue that investor data rooms could slow deals. They point to the fact that creating an investor data room is time-consuming and confusing for startups that do not have prior experience with this kind of collaboration.