Data Rooms are absolutely required when doing a deal no matter how large or small. Although, it does not always make financial sense to invest in a "full-blown" Data Room for a sub <$500K USD deal.
Before we get started, let's first define what a Data Room is. Data Rooms are spaces used for storing sensitive data, and are usually of a secure or privileged nature. Typically they contain passwords for assets getting transferred, customer lists, secret keys and environment variables for SaaS's, and much more.
With Data Rooms, you get secure folder file storage that doesn’t rely on physical hard drive space, but rather is in the cloud for both the buyer-side "Buyers" and sell-side "Sellers" to use.
There are many options to choose from, but they’re not always as affordable. Some Data Rooms can cost upwards of $20K from top providers. Fortunately, free options are available, and they come with several benefits (and a few drawbacks, as with almost everything in life).
If you’re looking for a quality free or cheap Virtual Data Room's (VDRs), a.k.a. Data Room for your first acquisition, or maybe for your Micro Private Equity's firms monthly purchase, this list will guide you in the right direction.
We’ll look at each of the most popular free Data Rooms and why you should consider using them for your digital storage needs during your Mergers & Acquisitions (M&A) process.
The first free Data Room on our list is Box - a popular and admired option that stands out amongst its competition.
The company developed advanced security controls along with good file governance and threat detection.
It's a very affordable and easy-to-use option. It also makes collaboration between teams pretty easy. Critical for dealing with multiple parties with team members on either side of a deal.
Workflows are simplified as well, with good on-boarding contract management and automatic processes.
Dropbox is one of the top free Data Rooms trusted by professionals all over the world. With it, you can deal with everyday tasks easily and with ease. Many boutique investments banks choose Dropbox, even for $5M deals. I've consulted with a few of them myself.
The platform allows users to create, edit, and share their content created in Google and Microsoft Office quickly and with little hassle. As a result, fewer tools are needed and workflows are smoother.
Dropbox works well with other tools as well, such as Trello, Zoom, Slack, and PowerPoint. You can use this Data Room’s storage features whether you’re on your phone, tablet, laptop, or desktop.
It makes sending large files uncomplicated and secure, just what businesses called for in Data Room tools. You can even set custom passwords and expiration dates to ensure the security of your data.
Google Drive needs no introduction - it’s been at the front of the Data Room industry for years. Here at XOXO we leverage Google Drive quite often for deals.
You can share, store, and access your data and content easily from any device that you can log into your Google account. The first 15GB of storage you use is free too, so you’re able to get to know the features and abilities before committing to a paid plan.
Google knows the value of effortless team collaboration, and made sure that Google Drive plays its part in keeping things simple. With secured cloud-based teamwork, it’s easy to share and access data.
Backing up and syncing your data is easy too, and can be set up to happen automatically for peace of mind.
Google Drive’s Data Loss Prevention also goes the extra mile to ensure that your data is protected at all times.
Ftopia offers many great features that makes it an excellent choice for data storage. You can use it as an FTP server, project repository, or secure file-sharing host.
What’s more, it offers up to 10 users, three rooms, and 5GB of storage completely free of charge.
Ftopia gives you some of the most advanced features offered by free Data Rooms, such as audibility, convenient collaborations, and custom branding.
It also performs really well in terms of security, which is one of the reasons it’s popular.
With data encryption, access-rights management, automatic data redundancy, and intrusion prevention, you can rest assured that your information will be protected.
However, you should note that Ftopia wasn’t designed specifically for M&A and Micro-PE, so if that’s important to you, you may need to look elsewhere.
With up to 10GB of storage available for free along with cheap upgrades, it’s easy to see why Koofr is a desirable Data Room.
You can connect multiple cloud accounts with Koofr, which makes it great for teams who work together remotely.
It’s also able to work with many of the other free Data Room's like Google Drive and Dropbox. You can have your data backed up and synced automatically as well.
Although you can still securely store your data with Koofr, it does not track your activities. That means your privacy is completely protected, which is something that few Data Room's can promise, especially the free or low-cost ones.
Koofr is compatible with almost all modern browsers, as well as all the major operating systems such as Windows, Linux, Mac, Android, and iOS.
This Data Room allows you to keep consistency across all your client activity such as tasks, documents, and chat. It’s greatly focused on the ‘human touch’ and offers 24/7 customer service.
You get unlimited file uploads and great customization as well as compatibility with tablets, desktops, smartphones, and laptops.
Your data will be well-protected with two-factor security, private cloud solutions, high-grade security measures, and complex passwords.
Communication is simplified as well, with group chats and convenient mentions. Notifications are fast and reliable too.
However, Clinked falls flat when it comes to the management of your data storage and role-based permissions. It’s not able to handle these rather essential abilities.
DotLoop is another popular choice in the free Data Room's industry that is easy to use and offers great convenience.
Team and client collaboration is uncomplicated and secure. It is a great choice for real estate agents and brokers, as indicated by reviews.
You get convenient and reliable data storage management that helps to keep workflows hassle-free. There are automated audit trails you can make use of as well.
However, it lacks due diligence management specifically and data protection, which means DotLoop isn’t really suitable for the management of M&A deals.
Store Your Data Securely and Affordably
There you have it - the top free Data Room's of 2021. All of them are available for free and offer good security. But, one of the most important aspects is ensuring your data is secure and you find a tool that both you as the "buyer" and the client as the "seller", trust and buy into.
Although not all of these are not all suited to handling Micro Private Equity or Mergers and Acquisitions, the Data Room's we looked at are all really good storage choices.