Chapter 4: Should I Have Them Sign an NDA?
With your customer-centric, value-adding idea in tow, you’re moving one step closer to starting your own business.
It’s time to start building it, and yet you don’t want anyone to steal your idea along the way.
No offense ? but I think it’s fair to say nobody will.
Here’s my take on NDAs, and let me be upfront about this: I’m not a lawyer.
The first thing I’ll say is if you have access, get a lawyer. A lawyer and a good accountant are two people you will need now, and always. If you have access to one, ask a lawyer about NDAs.
From my point of view, I think NDAs are mostly unnecessary and can actually hurt your business’ chances of getting off the ground.
Most startups fall under two main categories when it comes to funding:
- Bootstrapped – mostly self-funded, so you remain in full control of the venture.
- Equity Funded – funded by outside people who are issued shares of stock in return.
Whether you’re self-funding or looking for investors, you need to be able to discuss your idea in full bloom. You need to be able to get feedback on it, or it won’t go anywhere.
So should you make everyone who hears about it, sees a deck on it, or listens to your pitch, sign an NDA? Absolutely not and here’s why:
Most professional investors won’t sign it.
- Think about it, if every investor signed an NDA for every pitch or idea they heard, then they would need to track each one, year after year, and protect themselves against legal actions taken against any one of them, no matter how ridiculous. How could they perform their work? Most venture capitalists or VCs won’t even talk to someone who asks them to sign one.
- Not to mention that many people who are serious about business, and who knows how things really work, these people know that ideas are meaningless without execution, so stealing one is useless.
Most good people won’t need it.
- Still not convinced? How about this, if you’re asking someone to sign an NDA, then you are admitting you have some doubt about this person’s character. So tell me, even WITH an NDA, do you really want to share your million dollar idea with them? Thought so.
There’s one other reason you shouldn’t be doling out NDAs to potential investors, or anyone – you need to push your business out there and any hint of secrecy about it is not only a turnoff, but is counterintuitive to how the world works today with connections and sharing viewed as ways to propel your brand.
Instead of all this, why not just talk to people you trust, and then when you feel like you must gain their trust, shoot the person an email saying something like:
Thanks for hearing my pitch.
Please don’t share anything about project XYZ with anyone for now.
Your Name Here
See, wasn’t that easier? There are exceptions to all of this, especially when potential patents are concerned, and if there’s existing revenues at stake then consult a lawyer. But as far as holding on too tight to your idea in the early stages, I say let it go and see how far it flies.
Next time let’s make a Business Plan.
Catch up with:
Part 1 – Launching You, Inc.
Part 2 – Get Direction
Part 3 – Is Your Idea Any Good?
Jason Veduccio, author of The New American Dreamer: How to Land That Ideal Job in a Nightmare Economy is a hard-working entrepreneur following his dreams, and he wants you to dream, too. Drawing on his experiences working with companies on marketing, technology, hiring, and workplace issues, his regular column will demystify the job search process and identify strategies for moving up the corporate ladder. Founder of In1Concepts, Jason also knows the ins and outs of launching a new business. He welcomes your questions and can be reached at email@example.com.
Top photo: Bigstock