The global virtual data room software market has gained a steady pace as the industry has seen an upward trend in the last few years. As per studies, the digital data room market was valued at $1.38 billion in 2020 and reached $1.6 billion in 2021.
According to projections, the market is expected to keep the trend, as the forecasted value of the global virtual data room market is $3.02 billion by 2025 and $4.09 billion by 2028 — a 13.50% annual growth rate.
Why is the virtual data room industry growing at such a rapid pace? Which factors triggered the industry growth, and what are current data room market trends? Let’s find out.
Major Сauses Behind Virtual Data Room Market Growth
It is important to know that virtual data rooms are not a new technology. They have been in the business world for almost two decades. However, their presence was mainly limited to financial transactions like mergers, divestitures, acquisitions, fundraising, and similar processes.
Luckily, with cloud technology becoming common in businesses, virtual data rooms gained prominence in other business sectors. Today, digital data room software is serving almost every recognized business industry in the world.
Here are some notable factors that triggered data room market growth.
Digitalization
Digitalization in the corporate world has seen unprecedented growth in the 21st century. Businesses started shifting to paperless data management solutions, and the introduction of SaaS solutions became common for various corporate practices. In fact, many companies are trying to go paperless by shifting to cloud technology by all means, which automatically creates demand for digital data room software.
Data room services are cloud-based document repositories with advanced data management features. They can completely eliminate the need for in-house digital or paper databases, and on top of that, they are way more affordable than any other document management solution.
Also, they are remotely accessible, which means professionals, managers, board members, and investors can all access business documents from anywhere.
Digital Data Security
Digitalization has its perks, as it automates complex processes, but the reality hits hard when hackers wreak havoc on businesses. Cybercrimes are one of the biggest side effects of digitalization, as hundreds of businesses lose their precious data every year and pay heavy financial penalties. One primary cause behind the high cybercrime rate is inefficient and insecure digital data storage tools—easy targets for expert cyber criminals.
Data room software lowers the risk of data theft by employing robust internal and external security systems. It makes sure that businesses can protect their information from hackers, third parties, and internal employees as well.
Although every certified VDR provides basic data protection, the best data rooms also bring the latest security features like fence view mode, remote device purging, IP access control, digital watermarks, document shredding, 256-bit SSL data encryption, and multi-factor authorization.
Pro-tip. Always consider security as an important element when choosing data room software. One of the best research methods is to read online virtual data room review websites like Capterra, G2, Software Advice, and TrustRadius.
Covid-19 Lockdowns
The Covid-19 pandemic also played a huge role in letting companies know about these multi-purpose solutions — virtual data rooms. The mandatory lockdowns around the world pushed businesses to go digital, and work-from-home became a new norm.
Virtual data rooms became famous in the corporate world during and after the Covid-19 era due to several reasons. VDRs provided a complete virtual workspace where businesses could easily store, share, and manage data, but employees could communicate using VDRs’ built-in communication tools.
Data room software also helped companies streamline their internal and external meetings without compromising security. In simple words, digital data room software acts as a virtual office.
Current Data Room Market Trends and Common Uses
When it comes to virtual data room usage (both cloud and on-premise), North America stands as the biggest consumer of VDR technology.
That’s mainly due to the highest percentage of mergers and acquisitions in the world. Europe comes second in VDR usage, while Asia Pacific comes third.
Although businesses have gone back to normalcy, work practices have changed for good. Many professionals are more comfortable working from home, and companies like Google have shifted to a hybrid work culture.
In addition to that, remote and freelance jobs are on the rise, which leaves businesses with no choice but to operate through virtual workplaces like data room software.
Virtual Data Room Biggest Use Cases
In addition to mergers and acquisitions, digital data room software facilitates transactions like fundraising, asset trading, joint ventures, strategic partnerships, biotech licensing, initial public offerings, risk management, litigation, and asset management.
The BFSI industry tops the list of VDR consumption while retail & commerce stands second. Energy and utilities, healthcare, telecom and IT, and construction and real estate come next in line.
Parting Thoughts
The global VDR market is cherishing consistent growth and is projected to hit a $4 billion figure by 2028. Digital security, M&A activities, and remote work culture are some common trends that affect VDR’s market growth. The BFSI industry remains the top data room consumer, while retail and eCommerce come next. Among the biggest markets where the VDR industry is developed are North America, Europe, and Asia Pacific.
All these trends show that VDRs are here to stay and lay the foundation for the forthcoming development and growth of the VDR market.
