As the world moved from the agricultural platform to the industrial environment, businesses were formed to meet this new need. Businesses have their own requirements: raising capital, selling all or a part of the business, buying a competitor and other finance type requirements. Simple transactions could be satisfied by the local bank; however, when companies grew larger the deals got bigger, they needed legal and financial advisors. Complicated by the fact that the company was operating in several states, and potential buyers could be found all over the country.
The founding of the deal or data room. Legal firms began hosting the event as part of their services; this was a closed room with all the documents arranged on tables for potential suitors. Representatives would diligently review all details and make recommendations to the investors they represented; thus the term due diligence.
With the introduction of smaller format printing presses, copiers and faster mailing services; then printing companies RR Donnelly, Merrill and Bowne began offering document creation and distribution to their printing services.
This group is our first generation data room providers, at some point they began to lose market share to digital documents and overnight services; therefore, they acquire digital data room providers to fill this lost market share.
Enter the second generation. In many ways our data room history is parallel to desk top publishing and the demise of traditional printing. CompuGraphics, AM/Verityper and Mergenthaler were giants in their time but they lost to the new second generation players like Apple and Adobe.
V-Rooms is the oldest of the second generation data room providers, the exception would be IntraLinks founded in 1997. IntraLinks comes from the loan syndication space and was never in the printing business, and was the first to endorse digital data rooms as their only business. They have migrated into the business model of today's second generation VDR provider.
Second generation VDR providers are the new "fleet of foot" digital deal room providers, like desk top publishing the second generation providers knew what was needed in the paper data room and took that and many enhancements to the new service. They will be a SaaS provider using excellent security tools like SSL, encryption on data at rest and data in motion. They will have extremely easy to use user interfaces and lots of features that make them fast to set up, load and start selling the deal the same day. They will host the application and the data at hardened data centers with SAS 70 certification; unlike the previous generation with millions invested in facilities and thousands of employees (Bowne 2,800 employees). Second generation VDR service providers can deliver superior service with excellent security at a fraction of the first generation's cost.
This second generation has taken the data room from a sequential process with days of process time (distribution) to a totally parallel and global selling environment... at a fraction of the previous costs.
What lies ahead for the third generation of VDR? Companies are just now understanding that they can get the functionality of the first generation providers at a fraction of the cost with the new generation. Instead of a $5,000 a month room that is shut down the moment the deal is done, now the companies are starting to use virtual data rooms for all their departments. Legal, H/R, sales, vendor relations, engineering and other departments want their own room for their documents; like the past need for private networks.
What will the third generation bring us? V-Rooms is already testing and developing new features that broaden the value of the data room. The rooms will become the conference room of the future; housing the information, sharing and collaborating the data and controlling the access of the documents.
