No NDAs Allowed

In lots of industries outside of venture capital, before a business leader will share information with an investor or potential partner firm, they will ask for a Non-Disclosure Agreement — or NDA. This is one way to try and protect your ideas and intellectual property. However, in the VC world when a founder asks an investor to sign an NDA before a pitch call, it is viewed as a rookie mistake. It is really really uncommon for a VC to agree to sign an NDA before hearing a pitch from a founder.

Venture firms hear pitches from hundreds or thousands of startups each year, and many of these companies are going after the same markets. Often startup founders are targeting VC investors who have experience in the markets they are entering. It would be incredibly difficult for a VC to adhere to the terms of an NDA when they are actively involved in the sector already, so most VCs just take a blanket approach and always say “no!”

What can you do to protect your ideas? One thing to understand is that when you make your product available, everyone is going to see it anyways. In the tech space, competitive advantage is built through brand, go-to market strategies, and differentiation. Make your product the best in the market and provide exceptional value to your customers. If you do this, you should be in good shape. All that said, if you feel you have a truly unique solution and you don’t want the word to get out, then it is up to you to build relationships with a trusted group of potential investors who will keep their mouths shut. Don’t spam every VC on email and LinkedIn to get your business funded. Get referred to reputable investors from other founders that have worked with them, and trust that they will protect their own reputation and your ideas.

Thanks for reading today’s post, I hope this one helps you understand how to protect your ideas without making the rookie mistake of asking for an NDA.