Do we need a non-disclosure agreements? (NDA)

Discussion Dealing with non-disclosure agreements (NDA)

Do not get hung up on having every investor sign a nondisclosure agreement (NDA). Asking a formal private equity investor to sign an NDA, especially a venture capitalist, is a sign of an amateur.

It will be an instant deal killer—you will never hear back nor have any discussions with that investor ever again about your particular deal.

 – First, look at the NDA from the potential investor’s viewpoint. They see thousands of business plans each year. How can they possibly track thousands of NDAs? It would be a legal and administrative nightmare.

 – Second, venture capitalists are not in the business of stealing ideas and technologies.

 – Third, maybe you are just too in love with your idea, and this demonstrates that you have not properly completed your due diligence.

Hisrich and Peters provide the best strategy in handling NDAs. They suggest that all readers of your business plan who are not representing a professional firm should sign a NDA. Those representing a professional firm (such as venture capitalists, law offices, or bankers) need not be asked to sign a NDA.

SOURCE: Roadmap To Entrepreneurial Success