Table of Contents

Data Rooms vs File Sharing

Document sharing services have become synonymous with productivity in various industries and business sectors. It is undoubtable that their contribution to successful and secure collaboration can elevate a company’s efficiency and reputation amongst their peers, especially when it involves high-revenue deals and transactions. Whether it is for M&A, fundraising or financial audits, ensuring that any data shared in order to complete these projects is safe and protected is what any legitimate company strives for when running their business. This is where the question between a virtual data room and generic document sharing services comes into play as companies want to ensure their information is secure, but don’t want to be fiscally irresponsible in the process. 

At a distance, a VDR and Dropbox might appear to be the same product, just priced differently, however, realistically they offer varying features catered towards distinct purposes. Understanding these differences will aid in the paramount decision between the various platforms, especially when it weighs heavily on the security of confidential company data. This article will illustrate a few of the pros and cons of VDRs versus generic sharing services, highlighting the benefits with regards to different factors and sectors while also providing the necessary details for an informed client decision. 


The superior security of a virtual data room is what primarily differentiates it from services such as Dropbox and Google Drive. VDR providers are known for facilitating large transactions—due diligence and environmental audits—where confidential information is transferred and shared constantly. With this comes the undeniable assurance from a provider that none of this information will be leaked, accessed or deleted without the main user’s knowledge and discretion. 

This sense of safety goes hand in hand with a heightened sense of control whereby users are able to decide how their information is viewed and how long it is visible for. This is done with intricate features such as download and print enabling/disabling and watermarks on uploaded documents. While certain virtual data rooms provide 256-bit AES SSL/TLS encryption for data at rest and in transit, Dropbox and Google Drive can only assure its clients with a portion of this security. This is detrimental to any projects of a larger scale because of the constant motion with which data flows over networks, making the prevention of interception pertinent.  

With that being said, VDRs and generic document sharing services have enough in common to warrant confusion on the part of an unfamiliar, prospective client. Understanding the level of security each platform provides and what that means for your deals is vital in making the right decision for your company. While Dropbox might be great for sharing family photos or collaborating on minor projects, it is not the ideal sharing service for deals that involve fundraising, financial audits or environmental assessments as multiple users will regularly require access to confidential and important company data. 

In 2012 Dropbox had a memorable security breach that led to email addresses and passwords being leaked onto the internet, an extremely unfavourable occurrence for anyone using the platform to house important documentation. A leak like this within a platform that assists millions of users begs the question “if it happened once, will it happen again?” 

Professional Appearance

When thinking of a straightforward task such as data storage, the go-to is a generic document sharing service that will get the job done with as little monetary investment as possible. The thought of simplicity can sometimes overpower the understanding of its relevance to security and functionality. As mentioned above, platforms such as Dropbox and Google Drive are good options if your main goal is to share family photos, however, an M&A transaction should not be conducted alongside memories of a family vacation and class projects. Deals of this level require an elevated appearance of professionalism and sophistication that generic data sharing services just can’t reproduce. 

The lower price of generic document sharing services may correspond with their limited features and subpar security, but when the experience of invited users from external industries and institutions is taken into consideration, a virtual data room’s prices are justified. Of course, this all depends on the specific provider a client partners with—some lean their prices towards certain industries and aren’t always right for everyone. However, a professional appearance matters to those entrusting their information with you so taking that extra bit of initiative with a virtual data room can be the finalizing factor to a successful deal. 


The customer service support of a virtual data room compared to Dropbox or Google Drive can be another deciding factor when making the choice between which service to use for your deals. VDRs strive to provide efficient support 24/7/365 for their new and returning clients so that any technical or navigational issues can be handled promptly. While the aforementioned generic services offer client support in the form of help centre search portals and email/chat support, their on-call representative support seems to be somewhat lacking. 

For simple questions about how to use certain features, an online database of FAQs will suffice. However, for inquiries during arduous transactions, on-call customer support that you can rely on from the opening to the closing of your data room is key in facilitating a successful deal and protecting your reputation with others using the data room. Not only does this provide a comfortable net to fall on if necessary, but it also illustrates that these VDR providers appreciate your business and are there to help you with your progress to success. 

The ability to have options in a market otherwise oversaturated by choices between document sharing platforms is undeniably favourable. However, understanding the difference and intricacies that warrant the differences in price and praise that virtual data rooms receive over generic services is vital when choosing who to partner with on your own deals. The distinction between them seems to always come down to their security, appearance/functionality and the support offered to clients. Taking these factors into consideration can help elevate the experience of a more significant transaction, such as fundraising or M&A, not only for yourself, but also for those participating in the nerve-wracking and time-consuming deals along with you.