Communication · Investors

How to politely convince VCs to sign NDAs?

Fatima Asad Freelance Writer at Freelance

October 7th, 2016

The idea is simple and quite generic but the solution (execution) is very innovative. Most VCs and investors are reluctant to sign NDAs. What is your diplomatic communication skill to convince investors to go for signing an NDA?

AJ

October 7th, 2016

VCs get pitched so many ideas, it's not unlikely that multiple entrepreneurs pitch same/similar idea. VCs cannot take legal responsibility by signing an NDA.

Max Garkavtsev CEO at QArea, TestFort

October 7th, 2016

In general I would agree about VCs (don't try if you care not to lose them), but as for Angels - I think you have chances. And if you don't have funds yet, maybe Angels is your most realistic bet at this stage anway. 

Joseph Wang Chief Science Officer at Bitquant Research Laboratories

October 7th, 2016

You don't. As an investor, I say bluntly that I will not sign an NDA on the first meeting, and if you need money from me, you need to think of something else.

VC's and angel investors use an NDA as something of a filter. If you have an idea that is so fragile you need an NDA on the first meeting, then it's likely to be unfundable. Also, I don't want to tie my hands if I happen to come up with the exact same idea. The other thing is that a lot of the value that I add happens to be connecting startups with each other, and signing an NDA will get in the way. Also, I can tell you "yes this is a great idea, but there are five other people that I've talked to that are working on exactly the same idea. Here are their e-mail addresses and you should work with each other."

I do sign NDA's, but its invariably later in the process.

Also, one easy strategy that you can deal with is just don't disclose your secrets. A pitch can be ten minutes to one hour. Rather than getting an investor to sign and NDA, you can just say "here is the secret sauce". If your secret sauce is a basic idea, then the odds are that someone else will think of it. If your "secret sauce" are customer lists, some weird tech or skill that only you can implement, that's great. It's pretty frequent that I've been in conversations with startups, and I've politely asked a question and they've politely told me that the answer is a secret that they'd rather not share with me.






Alan W. Urech

October 10th, 2016

I agree with Dean completely.  Asking for an NDA to me as an angel investor tells me that you are not very learned in the process.  The reason being that moost investors get hundreds of business investment opportunities per year and the likelyhood of some of them being similar is great.  That  could put the investor in a legal situation if someone says that the idea was used.  The completion for investment is the other potential investments the investor could have with less risk. This is all weighed in the wash.  Provide publicly available information about the business first though a website to gauge interest.  "We design, market, install and service a unique cloud-based personal health portal."  Something like that.  Don't get down in the weeds about your secret sauce.

Brendon Whateley Founder at Kugadi

October 7th, 2016

If you feel the need for an NDA before being deep in the due diligence phase, then you are probably doing things wrong. How in the world are you going to sell a product that you can't discuss? 

Boris Kogan Startups and innovation

October 8th, 2016

VCs and investors will not sign an NDA in order to hear a pitch, for many good reasons.

Barry Burr founder, Barry Beams llc, a startup to re-light your night.

October 7th, 2016

Do not even try. Its a terminal breach of protocol in investor relations. You will be seen as the amateur that you are, projecting an impression that you will be equally unsuccessful and alienating in other contract and business negotiations. Rule without exception, do not ask a VC, Angel, or any outside investor to sign an NDA. If you don't get it yet why not, then you're not ready to be funded by any reputable investor that you would want to get funding from. hth, Barry Helmet Side Up, Barry * Oculus, Re-Light the Night Barry Burr p(323) 487-2002 Barry@BarryBeams.com f (650) 968-1228* "His job is to shed light, and not to master" ... Robert Hunter

Stan Podolski CEO at Nimble Aircraft.

October 7th, 2016

Politely?

... I think .50 should work

Don't ask them to sign an NDA, that's it