To NDA or NOT TO NDA?

[CryptO]

That is the question.

If I've understood correctly, from what I have seen, NDAs tend to get rediculed on this forum

So, recently I've submitted a couple of ideas to potential investors without even asking for them to sign an NDA.

Previously, I had always asked for a signed NDA (which is admitedly time consuming).

Is it really a good idea NOT to ask for an NDA?

When is it a good time to whip out an NDA?

Thanks

 

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[theag]

Heres the perspective of a highly successful entrepreneur and now VC: On NDAs and Confidentiality

Some more:
Why Venture Capitalists Won't Sign a Non-Disclosure Agreement | Startup Lawyer
Why Most VC’s Don’t Sign NDAs
How to Change the World: The Venture Capitalist Wishlist (first paragraph)

in short: don't use NDAs.

and I would also avoid "submitting" ideas to investors as this leads to them quickly being turned off by you. build at least a prototype and some customers. you will be guaranteed to be turned down if you show them an idea. with a prototype/customers you can still get turned down, but at least not instantly.

 

[theag]

One more funny addition At 2:05 "When you mentioned NDA - I got concerned. We don't sign no NDAs."

[video=youtube;SKArupEBE6Y]http://www.youtube.com/watch?v=SKArupEBE6Y[/video]

 

[The-J]

NDA's are stupid. Patents are smart.

 

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[snowbank]

NDAs are silly 99.9% of the time.

recently I've submitted a couple of ideas to potential investors

If you have awesome ideas(preferably ones already making money) send them to me if they're good I'll take a look.

 

[CryptO]

One more funny addition At 2:05 "When you mentioned NDA - I got concerned. We don't sign no NDAs."

[video=youtube;SKArupEBE6Y]http://www.youtube.com/watch?v=SKArupEBE6Y[/video]

haha, that was cool

 

[Flaag]

I wouldn't use a NDA, because it's very hard to get someone to feel your vision of your idea. Understanding the business model is easy, but feeling how the experience will be when it succeed (vision) is very hard.
Every great business started with a vision, and only if the business model showed promise other people would jump on the train.
For example; Bill Gates want on every table in the house a pc, that his vision. Probably, he feels it in his heart. I don't feel it, I understand it but that's all.
If you didn't create the vision, it's hard to see the future where the product is a success.

I once heard a famous investor put it in this words:
Call the company that is likely going to steal your idea. And try to sell it to them for free.
It won't work.
=> Not sure where I heard it.

PS: I don't have any experience with finding investors, but it's something I have when I share a dream/epiphany with a friend. Where I think it's the best thing ever, where he is just moderate excited.

 

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[GlobalWealth]

Successful investors need an idea like they need a new a**hole.

What they need is an entrepreneur they can back.

NDA's are shit. If you think you need one, your idea isn't that good.

 

[CryptO]

@ snowbank

PM sent. Cool

I'll need an NDA

ONLY JOKING!!!

 

[TK1]

Hey Alty, aren't you working on tell.me anymore?

 

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[CryptO]

Yes I am.

Next big step is an API for it that anybody can put onto their website.

I stopped working with the original development team because

it was getting too expensive for me.

I've got a coder for equity. So I diluted again!

but at least I don't have the expenses.

Work will be happening every month.

 

[bell12]

Successful investors need an idea like they need a new a**hole.

What they need is an entrepreneur they can back.

NDA's are shit. If you think you need one, your idea isn't that good.

I do not agree one bit that NDA's are shit. Unfortunately, these days there is alot of people who do end up stealing ideas in one way or form, and maybe add more to it to change it around a little, hence why some companies don't even apply for patents, as its all out there for someone to see and change. Atleast with an NDA sometimes you have some leverage as any of the information which was disclosed is supposed to be kept confidential. It all depends on your ideas originality i think. The question i have is, what do you guys think about the length of NDA's, how long the NDA should be valid for?

 

[Toao]

Well apart from that NDA's are not liked by most of the investors there are at least three things wrong from my point of view:

1. Even if you have world's greatest idea it won't take off without good execution so the idea is worth nothing alone
2. In my country (and probably in most european countries) NDA penalties are barely enforceable via court.
3. If you start to realize your idea and are successful people will adopt and imitate it no matter if your VC signed an NDA

If someone would present an idea to me which i loved I rather would think about if it's the right guy or girl for execution or where he or she would need support with execution. Taking away such an idea would not work as you rely on (enthusiastic) people to do the work and built the company.

 

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[bell12]

well yes of course execution is a huge thing. I was involved in a business before, did the proper execution. To date there is probably around 20 others doign the same thing now. Anyhow it just goes to show there is lots of people who can execute the same thing if they have the drive. The more complicated a business the harder it is to execute. with potential millionaire investors, you usually do not have to worry, but if you need someone to do work for your company, you never know.

 

[Toao]

Agreed. But as a VC I am looking for participation on other peoples execution. If someone worries about an NDA more than on his upcoming business opportunity then go ahead, probably it will never be done that way anyhow. There will always be people stealing your idea and sooner or later you need to tell the world (your potential customers) what you plan and how you want to do it. Of course the bigger entrance barrier your idea has the more unlikely it is that copycats will follow you easily. As we are speaking about fastlane businesses here I assumed that the idea meets the commandment of entry. If not well ... maybe time for another idea ;-)