Non-disclosure agreements (NDAs) allow founders to share confidential information with potential customers, partners and investors. To protect this private information and their business, founders should understand and implement the key aspects of an NDA.
An NDA is a contract between two or more parties that deals with the exchange and handling of sensitive, non-public information.
Sample NDA forms can be found online. Usually, after some experience, startups are able to negotiate the agreements without too much assistance from their legal counsel.
Founders should always ask potential investors to sign an NDA. Some will sign, and some won’t. If investors decline, it at least gives founders an opportunity to demonstrate that they are easy to work with by not raising too much of a fuss.
It is uncommon for institutional venture capitalists to steal trade secrets in a manner that might harm a startup, and you can often manage the patent disclosure risks with the right input from your legal counsel. For angel and one-off investors with experience in your industry, the reputational disciplines are likely the same, but you may want to press a little harder to get the comfort you need in order to move forward.
This article was produced by James Smith and Shane MacLean and is made available through the generosity of Labarge Weinstein Professional Corporation.