David Cummings on Startups

Annual No NDAs Reminder

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David Cummings

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Several times this quarter entrepreneurs have asked me for advice, I’ve obliged, and then they’ve promptly given me an NDA to sign. My response is always the same: unfortunately, I don’t sign NDAs to hear startup pitches. Mark Suster’s great post On NDAs and Confidentiality covers all the major points:

  • Processing more legal documents is time consuming and annoying
  • After talking with hundreds of entrepreneurs, it’s not possible to keep track of which ideas came from which entrepreneurs
  • Trust needs to be at the core of a successful relationship, and not initiated by a legal document
  • NDAs are difficult to enforce resulting in little value

This is the annual no NDAs reminder for most entrepreneurs (note: investors do sign NDAs for growth stage startups).

What else? What are some more thoughts on NDAs between entrepreneurs and investors?

Comments

4 responses to “Annual No NDAs Reminder”

  1. Ralf Gawel Avatar
    Ralf Gawel

    David, I totally agree. NDA’s are overrated in presenting a start-up idea. Trust comes first and it has to come from both sides before any legal, financial agreement is to be signed.

    Reply
  2. scott miller Avatar
    scott miller

    This is frightening to read. One of the biggest fears start-ups have is that their big idea will be co-opted into someone else’s product road map without any consideration of the consequence. At the very least – the NDA is a consequence consideration. If it is too time-consuming or confusing to keep up with it all, then it is seams our worst fears are validated.

    Reply
  3. Justin Grant Avatar
    Justin Grant

    Can we pitch our startup ScrubPay to you? (obviously no NDA!)

    Reply
  4. Anne Gordon Avatar
    Anne Gordon

    David, this is so true. So many times the client gets focused on the thought someone is going to take their idea/program, they lose sight of what they need to provide to get money moving to them.

    Reply

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