Guy Kawasaki on NDAs

Recently I have been asked a lot of questions regarding nondisclosure agreements (NDAs) and investors, either angel or venture capital. I previously wrote my thoughts on trying to drop NDAs on venture capital firms in “Why a VC Will Take a Lighter to Your NDA.”

And yesterday, Guy Kawasaki echoed my NDA-VC sentiments in “The No-Bull-Shiitake Investor Wishlist,” Guy’s latest post on the Open Forum by American Express. In his post, he gives some candid advice to those of you debating whether to hand over your nondisclosure agreement to a venture capital firm for a signature:

[D]on’t ask any potential investor to sign a nondisclosure agreement (NDA), because asking them to do so will make you look clueless. Venture capitalists and angel investors are often looking at three or four similar deals, so if they sign an NDA from one company and then fund another, they expose themselves to legal action. If you find an investor who is willing to sign an just to hear your idea, you probably don’t want his or her money.

I’ve never heard of a venture capitalist or angel investor ripping off an idea—frankly, few ideas are worth stealing. Even if your idea is worth stealing, the hard part is implementing the idea, not coming up with it. Finally, continuing the dating analogy, you probably won’t get very many dates if the first thing out of your mouth is “Will you sign a prenuptial?”

Guy’s advice about NDAs is just the tip of the iceberg in his post, as he also lays out the characteristics of an “attractive and fundable date” for a venture capitalist or investor. I strongly suggest reading the full post here.

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7 thoughts on “Guy Kawasaki on NDAs

  1. I knew there was a reason I followed your blog…just kidding. Great stuff here.

    I agree with you on the NDA's for investors. NDA's really only apply when you are talking to someone who is fully capable of taking your idea and running with it without you..like a direct competitor you want to merger with to produce a product or service in your mutual markets. In the case of a competitor not wanting to sign off on an NDA gives you a warning that they probably would steal the idea.

    Carry on with providing us more info like this. It is good stuff.

  2. I knew there was a reason I followed your blog…just kidding. Great stuff here.

    I agree with you on the NDA's for investors. NDA's really only apply when you are talking to someone who is fully capable of taking your idea and running with it without you..like a direct competitor you want to merger with to produce a product or service in your mutual markets. In the case of a competitor not wanting to sign off on an NDA gives you a warning that they probably would steal the idea.

    Carry on with providing us more info like this. It is good stuff.

  3. Thanks for the comment, Scot. And you're right, one must consider the ability of the "potential idea stealer" to implement the stolen idea.

    Every now and then I'll get asked to sign an NDA from a potential client. My email inbox isn't full of business plans, but I would face the same issue as an investor in that I would have to create a system to keep track of them.

    Oh and of course I would have no idea how to use a cloud, widget, .net, RoR, or similar platform to implement a startup idea.

  4. Thanks for the comment, Scot. And you're right, one must consider the ability of the "potential idea stealer" to implement the stolen idea.

    Every now and then I'll get asked to sign an NDA from a potential client. My email inbox isn't full of business plans, but I would face the same issue as an investor in that I would have to create a system to keep track of them.

    Oh and of course I would have no idea how to use a cloud, widget, .net, RoR, or similar platform to implement a startup idea.

  5. […] Muse won’t sign one (here’s why he will, but will charge you for it), here’s one post from the startup lawyer himself, Ryan Roberts, (and another), two from Guy Kawasaki (one here and […]

  6. […] Wenn Ideen in der großen Gruppe erarbeitet werden, dann kann auch der Konkurrent diese anzapfen und sein eigenes Produkt verbessern. Der Wettbewerb ist somit intensiver – aber wird dadurch auch bessere Lösungen (für den Verbraucher) hervorbringen. Aber, wie sagt Guy Kawasaki so schön: “Die wenigsten Ideen sind so einmalig, dass sie nicht ein anderer auch haben könnte” &#… […]

  7. […] to starting a potential relationship off on a horrible note, as Silicon Valley legend Guy Kawasaki says, Don’t ask any potential investor to sign a nondisclosure agreement, because asking them to do so […]

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