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Start-ups and entrepreneurs may want them but VCs won't sign
Written and edited on the 17:30(GMT) train from London Liverpool Street to Ipswich and dispatched from a free wi-fi site in Ipswich.
In my role as a business angel and VC, I have become increasingly sceptical about the purpose and validity of Non-Disclosure Agreements (NDAs) to the point where I will no longer sign them. In fact I can no longer find anyone in the tech and innovation game that will. How come?
On the face of it an NDA protects the ideas of the individual and group from plagiarism and exploitation. At the same time it clearly defines and demarks the scope for parties who may wish to enter into a serious commercial relationship to legitimately exploit the marketplace. But such is the pace of technology, change and the generation of ideas that NDAs have become degraded and useless through the following mechanisms:
Sometimes large companies insist on an NDA being signed when they have a pre-launch embargo on a product or demonstration. Here the NDA is usually very specific and very short-lived, and therefore much less of a problem. But most people can be trusted to stay 'mum' anyway, so why bother?
And the upshot of all this for start-ups? Only deal with good people, ie those with a good track record and/or those you know. Also, only reveal that part of the idea/technology that wins the deal. You seldom have to tell everything in minute detail. Remember, trust is what people do when they don't know any better.