Top Blog Posts On Why VCs Do Not Sign NDAs

Every now and then an entrepreneur will ask us for an NDA. We do not like signing them and we very rarely do (and never in the beginning of a discussion). We have signed a few in the past and it always had only one effect: it slowed down the discussion between us and the startup. 

Below you will find a very quick summary of why I do not think NDAs between startups and VCs are a good idea. Instead of going into the details of each of the points, I will post a list of good blog posts around these topics, since so much has been written about NDAs already. I will aim to expand this list and add new interesting posts as I come across them. Then, I will just send a link to this post to the next startup founder asking for an NDA.

Why NDAs are not a good idea (summary):

  • impossible to manage for the VC
  • slow down the discussion between startup and VC
  • signal lack of trust in the beginning of a relationship
  • in practice do not provide protection anyway
  • execution of an idea and the team around it is so much more important and defensible than the idea itself

Selected blog posts on the topic of NDAs:

Please let me know if you have any comments or additions to the above lists.

5 responses
At the level of business activities we are engaged, I, too have no use for NDA's -- w/30+ years in global business development, trust is essential and more often a given - by the way, give a skype call Pawel to Mark Cruz who is heading up an investment round for US$3-8 mln for www.reewire.com and kindly send my regards - Christopher Tingus in Boston - as I have known mark who now resides in Miami and is Exec VP Americas and soon to take on a global role for Denmark based Reewire - a technology mobile banking type platform as well as utilized in a payments format and now engaged in eight African countries and soon to enter the South American markets -- www/Reewire.com - one of the smartest investments I have seen in some time -- Mark Cruz' skype: mark.cruz818 - (Thank you) Christopher Tingus Managing Director Innovative Global Technologies LLC Washington, DC 20006 chris.tingus@gmail.com skype: christopher.tingus twitter: christoptingus
that's the worst article about NDA's I've ever read! A. Lack of trust, the term Venture Capitalist or VC's itself its the reason individual have NDA's. B. Slows down a discussion? Its a form no longer than 5 pages, in my case 2 pages, and if a VC's can not peruse over it within 5 minutes then I sure as heck would not like to be doing business with them. C. In practice it does not provide protection? That is a joke, a relitiave of mine practices commercial law for Tesco and the amount of NDA's she's had to sign in order to view a potential product for its stores are uncountable. D.Signals lack of trust in the beginning? Trust my friend isn't a given, its something earned. You certainly would not give the keys to your car to a stranger on the street, also admin rights to all the users of your website. Why? Because your do not trust them! So to say its a signal of a lack of trust is right, but to think the person coming to you with their prized idea and they should trust you without knowing you is insane. E. The last point in the article is jargon, it in itself has nothing to do with NDA's and secondly is simply wrong. An idea in fact is the most important thing, my point in case: Apple, Facebook, Tinder, ideas are the foundation of any business or individual, and to say that it's not as important shows the intellect of the individual.
Thanks for your comments Kyle. I am sure you'd expect I do not agree with your points. The articles I linked to should provide enough reasoning re why.
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