WE'VE MOVED!

We are proud to announce our NEW community destination. Engage with resident experts and fellow entrepreneurs, and learn everything you need to start your business. Check out the new home of StartupNation Community at startupnation.mn.co

To NDA or not

onlineeateronlineeater subscriber Posts: 16
edited December 2006 in Startup Funding
Today we solicited the help of a potential rather large investor. This gentleman is a good friend of an associate of mine who has been very successful and he is extremly wealthy. We also know each other but I would not consider his a close associate. When asked about signing a NDA he responded that he does not sign them. His position is that if he signs our NDA if he decides not to go forward with our project it could keep him out of similar projects in the future. He see`s 10 to 20 deals a week so I understand his reluctance. I talked to my associate and he does think the gentleman has more than enough money and is really busy with other projects and is confident he would do an end around. But he could not guarantee it. I would be curious to get some opinions from the community, especially those who have worked with other high net worth angels where this may have been a concern. Hopefully one of the Sloan brothers can chime in.
onlineeater2006-12-13 18:1:58
· Share on Google+ Share on FacebookShare on Twitter

Comments

  • robertjrobertj subscriber Posts: 0 Member
    . I talked to my associate and he does think the gentleman has more than enough money and is really busy with other projects and is confident he would do an end around. But he could not guarantee it.
    I`m not clear from the above statement whether your associate beleives the "investor" is likely to take your idea and start on his own or if he is too busy to do it.
    It`s fairly typical for Venture firms to refuse to sign NDA`s because of the volume of input. Some very active angels may be in the same situation. Other`s may just feel that the "safe" position is to not sign any.
    What I advise my clients is the following:
    1. Be clear as you what needs "protecting".  Is it technology, process , or ? then determine the optimum way to protect it
    2. Be able to move the discussion forward without disclosing the above. You should be able to determine whether there is mutual interest before you disclose your core intellectual property.
    Robert Johnson
    Robert Johnson
    · Share on Google+ Share on FacebookShare on Twitter
  • stevesteve subscriber Posts: 14
    Was just reading The Art of the Start by Guy Kawasaki. Highly
    recommended. He talks about this in the chapter about raising capital.

    He says any investor who would sign a NDA for a first meeting is not
    someone you even want to do business with.



    He has some advice for anyone who would ask an investor to sign a NDA to merely discuss a business idea.
    · Share on Google+ Share on FacebookShare on Twitter
  • Innovator7Innovator7 subscriber Posts: 9
    Yup, if you already have applied for a patent the NDA is pretty much worthless, if the patent is granted he`s out of the market.
    That may be true with the US.  In some countries such as China, IP law enforcement is practically zero.  Even in the US, it takes an average 3 years to get a patent issued.  Fast operators can make and launch a product in no time, sell it massively and retire in the Bahamas within that time frame.  Of course most products take much longer time to penetrate the market and become high volume items, in which case IP protection is useful.Investors typically don`t care for running a business - their money already makes money for them thru startups.  I`d say don`t worry too much about NDA when talking to professional investors.  On the other hand, beware of a manufacturer posing as investor.  Always have them sign NDA.
    · Share on Google+ Share on FacebookShare on Twitter
  • rvdebbyrvdebby subscriber Posts: 11
    OK... It`s not easy being Green ! I am going to ask the stupid question again. For all of us that are really just getting started, can someone explain what is "NDA"? From everything I am reading I am guessing it has something to do with non-disclose, am I right??
     Deb
    · Share on Google+ Share on FacebookShare on Twitter
  • stevesteve subscriber Posts: 14
    You`re right. NDA stands for non-disclosure agreement. 
    · Share on Google+ Share on FacebookShare on Twitter
  • onlineeateronlineeater subscriber Posts: 16
    From an investor group point of view I understand their policy of not signing an NDA right up front.  If Mr. Jones signs that, then he can`t share the info with the rest of the team or their advisors on certian matters of business.  At some point, I beieve, that both the entreprenuer and the investor/s do sign such an agreement, but not up front.  Since I have decided to use a third party to get the funding and put them on as consultant,  my NDA will be signed by them and the investors as well once the intermidiary firm  has secured my firm the funds.  This is not a group...just one individual.
    · Share on Google+ Share on FacebookShare on Twitter
Sign In or Register to comment.