Today we read this article on StartUp Daily - 'The Pitfalls of Asking an Investor to Sign an NDA'.
We couldn’t believe that an investor would tell you that it is ok to tell all and sundry about your brilliant idea without protecting your intellectual property (IP) in it. Dan Gavel goes on to tell you that you should only ask for a non-disclosure agreement (or confidentiality agreement) (NDA) to be signed when covering specific areas including ‘anything IP related or protected’. Guess what? Your ideas are your IP.
We think that NDAs are important. Until you are in the market with a well-developed product or service, sharing your IP without protecting it leaves you exposed. What’s stopping the investor running off with the idea or selling it to someone else? Nothing. And what sort of investor doesn’t understand or acknowledge just how important your IP is in the start-up phase?
An NDA is an agreement that a potential investor or other third party signs to say that they acknowledge and agree that your IP and ideas are yours, and not theirs. A good NDA should set out the consequences of a breach. If a career investor thinks reading over many NDAs day-in, day-out is too hard, then they should create a precedent NDA they are prepared to sign each time a business owner comes to them.
Yes, Dan’s right when he says that enforcing NDAs costs time and money. That’s no reason to make it easier for anyone to take your idea and run with it. What’s yours is yours, protect it.