Here are reasons why VCs should sign NDAs:
(NDA – Non Disclosure Agreement)
- it is common business practice
- all an entrepreneur, especially in early stages has, is her idea. it needs to be protected
- VCs can share data with competition – sometimes their own start-ups, or corporate development of big players in the space, ultimately hurting the entrepreneur
you can try to get a VC to sign an NDA. but VCs do not sign NDAs
so i am not sure it is a good start to a relationship.
( i have signed about 5 NDAs to date – and in general, it was a worthless procedure. lawyers made money. in one case the entrepreneurs who asked for an NDA actually stole the idea from another entrepreneur)
professional VCs treat your idea with confidentiality. not all of the time, not everyone. but extremely often. and when discuss your idea with others, it is with the intent of analyzing the opportunity and in a manner that will not disclose your secret sauce.
but my point has two other flavors to it:
- what counts is not just your idea, but your ability to execute upon it!
- what can really be protected by NDA, is usually not interesting for a first meeting, and ultimately, not the reason why a VC will invest in you.
in the software space, you ability to connect with people, communicate your idea, hear their feedback and embed it into your product counts more, much more, than your original idea.