Shouldn’t prospective investors sign non-disclosure agreements (NDAs) so that they don’t rip off our ideas?

Friday, October 19, 2007

Fred Greguras, Fenwick & West, http://www.fenwick.com/

Venture capitalists won’t sign NDAs before hearing your pitch because they see so many companies that may be in the same business segment and overlap in what they are doing. NDAs with investors patent counsel are usually feasible later during IP due diligence for a financing when, for example, investors counsel needs to review an unpublished patent application. I recommend “peeling the onion” in making disclosures to investors and others whenever feasible. This means disclosing only as much as you need to for the purpose of the meeting. This isn’t helpful in many businesses such as Internet where what you are doing may be obvious.

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