COVID-19’s Impact on the Virtual Data Room Market

The COVID-19 pandemic has undoubtedly changed how much of the world’s various industries operate – from their workplace setups to how they provide their services. Plus, with strict health and safety protocols still limiting in-person interactions, the internet – and its easy accessibility – has become more crucial than ever for today’s modern establishments.

Still, not all markets adapted to the change easily, although others managed to thrive despite the challenges. One of these markets that flourished during the pandemic is the virtual data room market.

However, how exactly did the COVID-19 pandemic impact data room services? Likewise, are these impacts set to last even beyond pandemic times? Let’s find out.

An overview of virtual data rooms and their benefits

Before we delve deeper into how the pandemic impacted the virtual data room market, let’s discuss what virtual data rooms are and how they are beneficial. 

Virtual data rooms are secure online spaces where companies can store valuable information and documents, such as corporate documents and contracts, that only authorized persons can access.

They have played significant roles in numerous industries, even before the COVID-19 crisis hit, as these VDRs gave companies a convenient and efficient way to access crucial data without worrying about security risks.

For example, when you compare virtual data rooms to physical copies, large enterprises or firms don’t need to worry about the loss or destruction of valuable documents while in transit. 

Similarly, they don’t have to worry about cybercriminals gaining unauthorized access to confidential company information with a secure electronic data room.

High-quality data room software has been particularly helpful for processes like company mergers or other types of joint ventures that require both parties to present their documents for transparency.

Of course, not all industries can stand to benefit from this type of software, but it’s considered a game-changer for many.

COVID-19 and the rise of online transactions

The sudden emergence of the COVID-19 pandemic has forced most of the world’s population to stay indoors and change how they do things – from how they get groceries and how they go to work, just to curb the spread of the virus.

As a result, more and more people turned to the internet for their transactions, including handling sensitive and confidential company matters. This increased the need for secure online platforms like the ones an online data room software can provide.

With online data rooms, businesses and their employees can continue operating as they can enjoy continuous access to the necessary company documents, even while working remotely.

With that said, this increased demand allowed virtual data room providers to shine and provide their services to interested customers. Likewise, this demand has also augmented the number of businesses on the market offering virtual data rooms.

For example, there are around 360 data room vendors in the US as of 2021, which increased by 4.9% from the 339 businesses in 2020.

The pandemic’s impact on the data room market

As mentioned, more and more firms are now looking for secure online platforms that can help them facilitate their transactions, which significantly impacted the virtual data room market. How so?

For one, the market’s value has continuously increased since 2018 and is predicted to continue rising at a steady growth rate until 2026. To put things in perspective, let’s take a closer look at a data room comparison.

In 2018, the virtual data room market size on a global scale was estimated to be valued at around 1.3 billion USD. The said market reached a value of 1.49 billion USD in 2019, but it has since grown to attain a value of 1.6 billion USD in 2021.

Its value is predicted to continue growing at a steady rate of 14.5% and reach 3.2 billion USD by 2026. This means that virtual data rooms are still set to play a significant role in the business operations of different firms, even when the pandemic is over.

Overall, this growth was all possible due to the pandemic’s emergence and the sudden shift to remote work and different online technologies to keep various industries operating.

The virtual data room market’s challenges during the pandemic

The virtual data room market has undoubtedly gained a boost in value during the COVID-19 pandemic, but this growth wasn’t without its challenges. One of the challenges virtual data room providers faced was accommodating the sudden rise in demand for their services.

This was especially true for larger-scale operations, as the transition to remote work and reliance on online transactions since the pandemic started has put a more considerable strain on data center infrastructures.

For example, a survey conducted in 2020 saw that around 78% of IT services experienced more outages than the last couple of years. With more and more companies relying on data centers to continue their operations, even slight delays due to outages can be costly.

This meant that companies offering data room services needed to overcome the challenges of data scalability and integration to fulfill their clients’ needs during the pandemic.

Aside from that, there have also been increasing concerns about privacy and security online. Since virtual data rooms entail keeping a company’s confidential documents in these online spaces, the damages of a data breach on a firm can be severe.

Therefore, it has been a challenge for data room vendors in the market to ensure that their platforms are as secure as possible so that they will be less vulnerable to cyber-attacks and data breaches. 

The need for heightened security and privacy measures has been further highlighted during the COVID-19 pandemic when most firms had no choice but to transition to online technologies for support.

Final thoughts

The sudden emergence of the COVID-19 pandemic caught the entire world off guard, and companies needed to adapt and integrate various technological solutions to keep their operations going.

Because of this, industries like the virtual data room market enjoyed a boost in growth over the last couple of years, and it seems like its value will continue to rise in the coming years.

However, online data room software providers need to address and overcome the challenges posed by the increased demand for their services if they want to continue the trajectory of their market’s growth.