Google Drive as a Virtual Data Room

July 08, 2024

by a searcher from Harvard University in Greenwich, CT, USA

I'm already using Google products for my internal team, can anyone please explain why Google Drive isn't sufficient for due diligence doc management w/ investors? I'd prefer not to spend $1000/month on a 3rd party solution. Seems like the main concerns with Drive are about limited security (no watermarking) and compliance (limited audit trail functionality outside of "view history") but those don't seem like a big deal. Drive has all the collaboration functionality (comments, version history), plenty of storage, and with some basic folder structure it should be easily navigable/searchable. What am I missing? Will this somehow be a problem with 3rd party commercial lenders? (p.s. I've already searched Searchfunder posts, and insights on this specific topic seem thin, posting for more visibility!)

Reply by a searcher
from University of California, Berkeley in Seattle Metropolitan Area, WA, USA

All depends on your investors or the parties that are going to be accessing. Google makes it far easier if everyone has an email that's tied to Google (gmail or a domain with Workspace or some other manner), which can be annoying for those outside that ecosystem. But it's completely sufficient across the board except for your bankers, potentially (they'd request you to use one of theirs, anyhow). I'd say DocSend and the like are overkill but again, personal (and professional) preference (mainly each of our habits or what we're used to, tend to dictate where we land.

Reply by a professional
from Northwestern University in Southborough, MA, USA

When I sold my company, the acquiring organization said their IT team refused to use google for data rooms due to security reasons. I didn't get more feedback than that, but I started thinking a lot about why, and I think it's because google sign ons are ubiquitous and people have granted permission in quite a few ways to view google drive files. We used Microsoft Sharepoint as our dataroom and I have to admit, I really thought it was a killer solution. I haven't bought a company yet, but I feel the Sharepoint solution is the best option of the cheap ones.

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