Businesses exchange documents in every big deal. A secure space where those files can be accessed is called a physical data room. Over the past few years, companies have started using the digital counterpart to a data room — a virtual data room. Why are physical data rooms losing their position in the business world? 

Why VDRs are gaining on physical data rooms

Here are several reasons why:

  • Physical location. The documents required for a business deal are stored in a secure physical location. This means that the files can only be accessed in that place, and people need to travel to and from the physical data storage. This adds the effort of scheduling access times and dictating workflow via opening and closing times of the data room. 
  • A restricted number of visitors. Not only is the file space restricted by location, but also by the capacity of people accessing the files simultaneously. No physical room is infinite, and sometimes different teams will want to have access to the necessary documents — but will need to wait their turn. Aside from taking into account the data room’s hours of availability, we also need to keep in mind the room’s capacity. 
  • Slow project completion. All of the aforementioned reasons result in a big waste of time. Projects that require extensive due diligence are already taxing enough, but combined with shortcomings of the physical space, they can become a nightmare. Even after scheduling trips, changing the workflow, and creating an order, it all results in a waste of time. The online due diligence process would surely cut the time it takes to complete.
  • Lack of storage space. The documents can only be accessed, and nothing can be done with them on the spot. There is no search function and no tools for questions regarding certain files. The process of finding the required data and finding out what certain parts mean is another time-consuming action.
  • Lack of discussion. And while you are accessing the files in the physical data room, you cannot coordinate with other teams. You are inside of the data room at different times, so on-site communication cannot take place. We all know how faulty our memory is, and even by noting down important observations, we might not be able to convey what we thought about inside the data room.
  • Interrupted supervision. A PDR might be equipped with security guards and administrators, but the human eye might not observe every action that takes place inside of the room. This could result in a data breach or just mishandling of documents, which makes it more difficult to organize later.
  • One room for one project. The physical limitation of the space makes it impossible for a couple of projects to take place simultaneously. The previous project needs to finish before the next one can begin. This is not the problem in a virtual data room.
  • High cost. A physical location, staff that takes care of the room, and travel costs all add to a company’s expenses. It is another financial burden that could be done away with by employing a virtual data room provider. 

We are sure that there are many more reasons for the lack of popularity of physical data rooms. So now, let’s take a look at the benefits that digital data room software can provide you with.

8 main advantages of virtual data rooms

As the virtual data room is a new invention, the providers made sure to improve upon the faults found in physical data rooms. Here are the ways they achieved that. 

  1. Cloud-based location. An online data room, unlike its physical counterpart, can be accessed from anywhere, without having to travel to some remote location. Placing all of the documents in a secure online repository opens many new possibilities.
  2. Unrestricted number of visitors. The virtual file space is not bound by the limitations of the physical world, and that is why many people can access the files at the same time without having to wait. The documents are there to be viewed and not just to sit around and wait for the next team to arrive.
  3. Time-saving solution. Thanks to a large number of templates available, it is much easier to organize files. With a clear folder structure, you can better manage your company’s workflow and the investors interested in your business.
  4. Wide range of file editing features. You have a question about a file your employee uploaded. Or maybe one of the investors doesn’t understand what a certain document means? All of those issues can be noted from within the virtual data room software.
  5. Built-in communication. When deciding on whether a document needs to be edited or just placed somewhere else, you can use the built-in chat, or in some cases, even use Zoom from inside of the software solution. Communicating with other team members is intuitive, as it’s similar to chatting on social media sites.
  6. Military-grade security. The providers of virtual data rooms know that the files put into data rooms are of extreme importance. That is why the security of this online data repository solution needs to be military-grade. Apart from security protocols, you are also able to see who accessed what kinds of files and how long they spent looking through them. Additionally, you can also give and revoke rights to see a specific file.
  7. Cooperation capabilities. Space is no longer limited to just one project. You can put your documents in different categories, set up structures that support multiple ideas at one time, and work with people worldwide. Many companies do not have the time to focus only on a single project, and this is why they choose virtual data.
  8. Needs dictate costs. Many providers offer various subscription pricing tiers. Unlike in a PDR, here you won’t have to pay for staff, a physical location, or travel expenses. It does not matter if your business is a small private startup or a large public corporation — there is a virtual data room to fit your budget. 


Technology is created to serve people. As physical data rooms are slowly fading from use, a new virtual data room solution will take its place. It addresses all of the shortcomings of its physical counterparts and still has room to grow. 

To make sure you find the VDR that best suits your needs, take advantage of the free trials offered by most of the largest virtual data room providers.