Short answer
A virtual data room is a secure online workspace used to store, share, review, and audit confidential documents during transactions, due diligence, fundraising, legal matters, and enterprise collaboration.
Expanded answer
Unlike general cloud storage, a virtual data room is designed for high-value and high-risk document workflows. It typically includes granular permissions, watermarking, access logs, document controls, and audit trails.
Banks, law firms, investment teams, private equity firms, and corporate development teams use VDRs to collaborate with external parties while maintaining control over sensitive files.
For a fuller long-form guide, see What Is a Virtual Data Room? A Practical Guide for Deal Teams.