To most businesses, the term virtual data room goes hand in hand with the deal process. Which, makes sense, right? Well, yes and no. A virtual data room, also referred to as a VDR, is designed specifically to securely store and distribute information to multiple parties via the cloud, and one obvious use is as a deal room. For businesses going through a transaction, efficiency and security should always be top of mind, so using an online data room that allows for strict control over critical corporate documentation is a given. But, that begs the question - why is it only important to keep your business documents secure and easily accessible during a transaction, and not on a regular basis? Aren't your company financials, intellectual property, employee information, and proprietary data just as critical to your business on an ongoing basis?
Here are seven unexpected but important ways you should be using your virtual data room:
1. Protecting Your Intellectual Property
When it comes to your IP and trade secrets, you don't want to mess around. This information is what makes your business unique, valuable, and operational. So, whether your IP is a formula, computer code, a customer list, or even a business plan, using your virtual data room as secure file storage for documents at rest helps set your business up for future success by preventing potentially catastrophic consequences of an unintended or vengeful distribution of information.
2. Securing Employee Information
Your employees are literally the heartbeat of your business. They are the living and breathing parts of business that make everything possible. As an employer it is your responsibility to ensure that their personally identifiable information is kept secure. And, if you don't, you and your business could suffer greatly, should a data breach occur. Just ask Sony, and their former executives. Their 2014 security breach that exposed over 3,000 current and former employees and private executive communication has reportedly resulted in $4.5M in reimbursements, plus an additional $3.5M in attorney fees. Using a VDR is a simple and cost effective way to store all of your HR documents.
3. Preventing Data Leaks
Maintaining the security of your private business information can be done fairly easily using a virtual data room. Storing information in the data room gives businesses complete transparency into how employees and other permitted parties are interacting with each document. Audit logs can produce detailed daily reports for room administrators, showing every document interaction, and unique watermarks discourage data leaks by showing the viewers name on every document -something that Uber and Lyft both had to learn the hard way. Each suffered internal data leaks in the last few years which resulted in private company information becoming public. And when it comes to external attacks, two-factor authentication and robust security keep your information protected.
4. Communicating With Your Board
The information contained in board meeting minutes must be stored somewhere. Additionally, that information needs to be referenced and viewed by board members in order to work on new initiatives, check on the state of the organization, and make future business decisions. Your key financial documents will often need to be reviewed, and using a VDR allows for all of this to be done in a simple and secure manner.
5. Managing Investor Relations
Similar to board communications, your investors need access to certain corporate information, even when you aren't raising funds. But it's critical that your business remains in control of your documentation. Why? Well, not every investor or potential investor will remain involved with your business. And, when giving access to sensitive information, it's important that the right people see what they need to see but only when they need to see it. You don't want to use email or file sharing collaboration tools for this mainly because, by design, those tools act like digital copiers, resulting in multiple copies of your documents that can be forwarded on and shared with others. You don't want that information falling into the wrong hands. A virtual data room gives you the option to set strict user permissions, helping take the "what if" out of the equation.
6. Storing Corporate Contracts
As your business scales, your number of corporate contracts will too. Using a data room to store your contracts means that every contract and signature document is organized, easily located, and securely managed. Simply upload all of your final documentation and you will be ready for any due diligence situation, including fundraising, legal reviews, and internal or external audits.
7. Preparing for Transaction
For a growing business, opportunity can sometimes present itself unexpectedly. And, when it does, you will want to be ready, because taking too much time can kill a deal. Virtual data rooms, when used as an ongoing repository, help save on time, money, and stress for the leadership team. By keeping all of your critical documents, employee information, key financials, IP, and other proprietary information in a secure data room, it is easy to share information quickly with potential investors, acquirers, partners, or licensees.