We’ve all heard the saying, “You get what you pay for.” Often, free options may appear attractive initially but can turn out to be less than satisfactory. When it comes to free virtual data rooms (VDRs), could they be an exception to the rule?
VDRs are critical tools for businesses involved in complex transactions. They offer a secure space for storing sensitive documents and collaborating with authorized parties. The most reliable VDRs can streamline legal compliance, auditing, and due diligence processes, helping users close deals more efficiently.
For those just starting out, finding a cost-effective VDR solution is essential. But can a free version truly meet your needs? Let’s explore five crucial factors that can make or break your VDR choice.
The core function of a virtual data room is to secure sensitive information. While free file-sharing services like Google Drive and Dropbox are sufficient for personal use, they lack the robust security measures needed for high-stakes transactions like mergers and acquisitions. Free online data rooms fall short in this area as well.
To protect your business from risks such as the loss of confidential information or sensitive financial data, a VDR must offer top-notch security. Unfortunately, the limited security features of free VDRs make them unsuitable for many types of transactions.
For example, businesses in regulated industries often need to comply with standards such as GDPR, HIPAA, or SOC 2. It’s unlikely that a free or low-cost VDR will provide the necessary level of protection.
However, leading VDR providers often offer free trials, allowing you to evaluate the platform while ensuring your data is secure. Key security features of top VDRs include:
Military-grade 256-bit encryption
Storage on SSAE18-certified and ISO 27001-compliant servers
Plug-in free technology
Moreover, top VDRs offer robust document control features, ensuring your data remains secure even after it’s been downloaded.
Some free file-sharing and VDR software provide limited control over shared documents. For example, you might be able to restrict editing or track changes made by others.
However, free VDRs typically lack advanced digital rights management (DRM) features that are crucial for maintaining control over your data, such as:
File encoding: Administrators can embed access controls within files, allowing them to grant, revoke, and modify access rights. You can also restrict users’ ability to share documents, ensuring you retain ownership of your confidential information.
Workspace access: Premium VDRs offer multiple workspaces, or “vaults,” accessible only by authorized personnel. This ensures that individuals see only what they need to during the transaction process.
Secure login protocols: Users must follow secure login procedures, such as two-factor authentication, to access the VDR. Free versions often provide basic security, leaving your private data vulnerable to unauthorized access.
A free virtual data room often lacks the revenue to support comprehensive customer service. This means you won’t have access to a dedicated call center for immediate assistance, and email support is likely to be minimal or nonexistent. You might find a chatbot, but its help will be limited.
If you’re managing a critical transaction, such as a merger, acquisition, or real estate deal, can you afford for your virtual data room to fail? Choosing a free VDR could lead to extended downtime with no support, resulting in frustrated clients and potential lost opportunities.
In contrast, paid VDRs offer a different experience. Dedicated development teams work to keep the platform secure and functional, and customer support services are available to assist you. Email support is common, and some plans even include concierge services with dedicated customer success managers to help you maximize your VDR’s potential.
A free VDR might meet your needs initially. However, as your business expands, you'll require a VDR that can scale to accommodate more users and increasing amounts of data. Paid VDRs are designed to grow alongside your business, but free versions typically lack this level of scalability.
This limitation could lead to time-consuming document management to stay within storage limits, ultimately costing you more in the long run. Alternatively, you might have to upgrade to a paid version later, which can be both time-consuming and expensive.
Free VDRs often come with limited features, functioning primarily as basic file storage platforms with a few added capabilities. However, you may quickly outgrow their usefulness as your needs evolve. You might require a VDR with more advanced collaboration tools, activity tracking, and granular user management.
The best-paid VDRs offer all these features and more. You can collaborate with other users in real-time, with Q&A sessions saved for audit trails and easy access to information that supports decision-making.
