Pros and cons of free virtual data room software in 2024

The virtual data room (VDR) market is steadily evolving. It was valued at $2.23 bn in 2023 and is forecasted to reach $5.76 bn by 2032. Along with that, the number of VDR providers continues to grow, filling the market with a wide range of propositions that differ in terms of services and pricing. 

And while the price isn’t typically a decisive factor for large corporations, it’s not necessarily the same for small companies. A recent study shows that 68% of startup owners and SMEs face certain cash flow problems, making them opt for cheaper or free VDR options for cost-saving reasons.

But are free virtual data room providers truly cost-efficient, especially when it comes to security features? Discover the answer in this article, along with a comprehensive overview of the advantages and disadvantages of free VDR software.

Key takeaways:

• Top free virtual data rooms in 2024 (or cloud storage solutions with VDR functionality) include DropBox, Box, OneDrive, Google Drive, and Koofr.
• The main difference between free and paid VDRs is the advancement of provided functionality, especially security features.
• Free virtual data rooms are a great solution for non-critical file storing and sharing or personal use, while paid virtual data rooms are recommended for use during complex financial transactions or when there’s a need to share confidential data with third parties.

Top 5 free virtual data room options to consider in 2024

Here are the top virtual data rooms (or cloud storage solutions that provide certain VDR functionalities) that you can use for free or at low cost:

1. Box
2. DropBox
3. Google Drive
4. OneDrive
5. Koofr

Let’s now review what each of these have to offer.

Box

Box is a cloud content management platform that offers a variety of features for effective collaboration and data storage. Its clients include AstraZeneca, Allergan, and Broadcom.

The pricing structure is user-based, meaning the more users that need permission to access files and folders in a data room, the higher the price you’ll need to pay. It makes Box a free or low-cost data storage software for individual users or small teams. However, larger enterprises will need to pay more — the business plan starts at €13.50 per single user per month. 

What’s more, cheaper packages don’t include essential security features, such as document watermarking, advanced reporting, or HIPAA compliance. This may put confidential document sharing at risk, for example, during M&A and due diligence. 

Top features: 

• E-signature
• Shared link expiration
• Centralized audit logs
• Automated workflow
• 3 levels of granular access controls 

DropBox

DropBox is a cloud storage solution used for data storage, collaboration, and file sharing. Moleskine, Paymark, and Campaign Monitor are among DropBox’s clients.   

The pricing structure of DropBox is subscription-based and depends on the number of users and storage size. It means that the more storage you need, and the more users on your team, the more you’ll need to pay. For free usage, DropBox offers 2 GB of free storage for a single individual user.

DropBox offers several collaboration features such as comments, annotations, or task assignments and a variety of integrations with tools and platforms such as Adobe, Slack, or Canva. This makes DropBox a great and easy-to-use data storage solution when it comes to personal or non-critical file sharing. However, despite offering many security features, such as watermarking, granular access permissions, and the remote wipe, this software might not be secure enough for an M&A deal, capital raising round, or other complex financial transaction.

Top features: 

• Full-text search and image search
• Tiered admin roles
• Multi-factor authentication
• Deleted files recovery
• Expiring shared links

Google Drive

Google Drive is a part of the Google Workspace ecosystem that offers file storage and synchronization services. Though not a 100% virtual data room, Google Drive offers certain VDR functionalities, and is considered one of the best free virtual data room software for file sharing. Google Drive clients include Airbus, Wayfair, and Salesforce.

The pricing structure is subscription-based: there are several packages for business use and one for personal use, which is free. All packages differ in terms of storage size and features. However, every plan includes Google services such as Gmail, Meet, Calendar, Chat, Docs, and Sheets. This makes Google Drive a great tool for corporate data management and collaboration. 

At the same time, dealmakers might want to use a virtual data room designed specifically for M&A or due diligence, since security features provided by Google Drive might not be enough for highly-sensitive data sharing. What’s more, there have been several cases of data breaches in Google’s history. The biggest one happened in November 2018, when about 52 million personal profiles were exposed.

Top features: 

• Video conferencing
• Two-step authentication
• Data loss prevention
• Chat team messaging
• Phishing and spam protection

OneDrive

OneDrive is a product of the Microsoft 365 ecosystem. Just like other software on this list, OneDrive is a cloud storage solution that offers certain virtual data room functionality for free, making it a free data room. Among OneDrive’s clients are the Greek Ministry of Migration and Asylum, Petrobras, and Dimension Data. 

The pricing structure is also subscription-based: there are different packages for home and business usage. What’s more, a single user can get 5 GB of storage for free.

Despite being an excellent solution for personal or non-critical file sharing like Google Drive and DropBox, OneDrive won’t fit as a deal management software, when lots of confidential documents are involved. This is because OneDrive lacks advanced features such as dynamic watermarking, screen capture prevention, or remote document shredding.

Top features: 

• On-demand file sync
• Connection to other Microsoft apps
• Single sign-on
• Document access expiry
• IP address restrictions

Koofr

Koofr is a Slovenia-based cloud storage solution, offering free options for data storage. It can also be used as a connection tool between popular cloud storage options such as DropBox or OneDrive.

Koofr offers a subscription-based pricing structure: there are several packages that differ in terms of services offered and storage size. Koofr is considered one of the most low-cost data rooms since the price starts at only €0.50 per month. 

However, Koofr functionality is quite limited: there are no standalone collaboration tools or advanced security tools. This makes it difficult to use Koofr for complex tasks such as audit, data protection, and due diligence.

Top features: 

• Deleted files recovery
• Built-in versioning option
• Two-factor authentication
• Image editor
• Time-limited links sharing

What is the difference between free and paid virtual data room providers?

The main difference between free and paid virtual data room solutions lies in the range of services they offer.

Free virtual data rooms are generally less advanced. They offer a variety of data management and collaboration features, but they’re rather limited in terms of secure file sharing. Still, free data rooms perfectly suit the needs of small companies or one-time projects that don’t involve confidential data.

Paid virtual data rooms, on the other hand, emphasize the security and privacy of clients’ data, which makes them suitable for various complex financial transactions. Paid virtual data rooms typically offer advanced security features such as in-built redaction, fence view, and several levels of access permissions. What’s more, most paid VDRs are usually in compliance with laws and regulations such as HIPAA or GDPR.

In what cases should you use free VDR solutions? 

Free virtual data room solutions are a life-saver, when:

• There’s a limited budget and a need to store large volumes of data.
• There’s a short-term project or one-time use case where you don’t need extensive features or long-term support.
• You need a data room for small-scale operations that don’t involve critical data sharing.

The above-mentioned free VDR use cases make it a perfect solution for SMEs, non-profits, freelancers and individual contractors, research and educational institutions, and community organizations. However, it’s only relevant when no critical business data is shared with third parties.

Explore a detailed 7-step guide on how to select a virtual data room in our dedicated article.

When is it better to avoid free or cheap virtual data rooms?

Using virtual data room software for free can be risky, especially in scenarios where data exposure could bring harm to a company, both financially and reputationally. These risks are particularly acute in situations such as:

• M&A
• Capital raising
• Legal proceedings
• Audit
• Clinical trials
• Board governance
• Intellectual property management

Even if you opt for the best free virtual data room software in these cases, there may still be risk, as it won’t likely have essential security features such as:

• Advanced access permissions

The best paid virtual data room vendors offer up to eight levels of access controls, enabling precise customization of access rights for each user. This ensures the prevention of unauthorized data access.

• Detailed activity tracking

With the help of detailed audit trails, VDR admins can monitor every action in the virtual data room space, which minimizes the chances of harmful actions or unauthorized third-party access.

• In-built redaction 

Top paid virtual data room providers offer the redaction feature. It blackens out file areas that contain highly sensitive data or personally identifiable information, keeping it private.

• Compliance with the latest data protection laws and regulations

Paid virtual data rooms ensure they’re in compliance with the latest data protection laws and regulations. This, in turn, ensures they have measures in place to protect clients’ data.

Choose the best virtual data room for your business needs with our comprehensive virtual data room comparison guide.

Advantages of iDeals VDR over other options

Though iDeals isn’t a free virtual data room, it offers a generous 30-day free trial. During this period, users can test all functionality at no cost and decide whether to proceed with the paid subscription. 

At the same time, iDeals offers advanced features designed to assist clients in any situation: from secure online data storing to conducting due diligence or clinical trials.

The main benefits of choosing iDeals over free options include the following:

• Advanced security

Compared to other free VDRs, iDeals takes serious security measures to ensure clients’ data privacy and confidentiality. Security features include dynamic watermarks, in-built redaction, 8 granular access controls, fence view, remote wipe, IP restriction, and more.

• Streamlined collaboration

iDeals users can effectively collaborate on files right inside a virtual data room with the help of advanced Q&A workflows. You can leave the question on any file, assign an expert to the question, and get prompt answers.

• Efficient data management

iDeals ensures that all users can easily manage their uploaded data, regardless of the size. This is possible thanks to features such as drag-n-drop and bulk upload, full-text search, automatic index numbering, file labeling, and more.

• Multi-project management

iDeals allows for creating and managing several projects simultaneously by providing a separate virtual data room for each. You only need to pay a fixed subscription price and then create as many projects as you need. This is especially helpful when raising capital, as you can create a due diligence space for each prospective investor.

• Full control over VDR activity

iDeals virtual data room administrators can monitor all the actions inside a virtual data room and get comprehensive reports on it. iDeals offers detailed audit trails, reports exported to Excel, and subscriptions to automatic reports.