NDAs when speaking with possible co-founders

Peter Ibrahim --

November 12th, 2018

From reading around it seems pretty clear that NDAs are a total no-no when it comes to reaching out to investors. Is the position as clear-cut when it comes to, say, discussions with someone you want to bring in as co-founder (handling sales/marketing/etc)? To the extent that even the request alone would be looked upon extremely dimly, etc? Or is this more of an acceptable situation to at least request it, even if there's ultimately pushback?

Andrei Negrau Founder of Adhance.io

November 14th, 2018

NDAs are a pretty bad signal when it comes to investors and possible co-founders.

When you're faced with signing an NDA is pretty much like telling the other party that you can't trust them.

Ideas are useless without execution, so don't really worry about and better start working on your big idea.


Dane Madsen Organizational and Operational Strategy Consultant

November 13th, 2018

It is less an issue, particularly if it is a clear bilateral agreement. Funds do not because they may have already seen a business like yours or may in the future and do not want the burden of having to manage the paperwork/records/potential lawsuits/whatever. It is less an issue for those that are looking at co founder roles.

Paul Garcia marketing exec & business advisor

November 14th, 2018

This question has been beaten to death in previous discussion threads. Have you looked at any of them?

The NDA is for your peace of mind. BUT, remember that it is a unicorn investor gives a flying crap about taking your idea and running with it themselves. They're INVESTORS, not people going into business for themselves. They are investing mostly in YOUR ability to deliver, not that a thing can be delivered by any trained monkey.

So no, it's not a bad thing to have an NDA process, the simpler it is the better. Two short paragraphs should cover it. One way that I approach it is that the discussion of the concept (unless pre-patent filing, so you don't invalidate your patent) does not require any agreement to hear. But if they want to see financial projections (like 3yrs projected expense/income), then they need to sign an NDA. Often you can say at that point you require it because the source of some of the data used to generate the figures requires it. Another way to approach it is that any discussion of the plan is free from agreement, but if they want a written copy of the plan, it could require a no-sharing agreement.

Investors understand that some information needs to be protected. What they get pissed off about is very lengthy NDAs and agreements that are written without thought to whether there's any actual risk. In other words, don't waste their time when an agreement doesn't actually protect something at risk.