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Don’t Ask Investors for an NDA


If you want to send your executive summary to an investor, don’t ask for a non-disclosure agreement. I was trying to help a company get in front of an investor and we asked for a non-disclosure agreement (investor is not only an investor but operates companies too, and also really more of a PE investor instead of a venture capitalist, clearly in the space and a potential competitor).

Investor’s response: “We’ll pass. Shows JV team and lack of experience on the company’s part.” WOW. We were fully prepared for the investor to say no, but not that reaction. If you don’t ask for it you won’t get it, right? Oh so true but in this case, it killed the opportunity.

I had always understood that West Coast investors would not sign NDAs, so don’t even ask, but that some East Coast investors would. From having worked with East Coast PE firms, I know that NDAs on the East Coast are more common.

Maybe the game has changed; I’ve never seen such a stark reaction from an investor.

Image credit: CC by See-ming Lee 李思明 SML

About the author: Bo Sartain

Bo is a practicing corporate attorney with the law firm of Haynes and Boone, LLP.  Bo’s legal practice focuses on the representation of investors and issuers in company formation, private equity and venture capital preferred stock and preferred LLC membership interest equity financings, and the representation of buyers and sellers in mergers and acquisitions. Formerly, Bo was a Systems Engineer and the founder and CEO of a startup software-as-a-service company.

  • Daniel O’Neil

    Was this supposed to say anything? I got nothing. Don’t ask investors, or potential competitors, for an NDA? You mean openly discuss MY concept and ideas without ensuring a legal construct to protect MY concept and ideas from theft by the competitor (potential investor)? You touched on that each coast acts differently, but nothing after that….I don’t know what advice you just gave me…none?

    • Jay Surovy

      I have been reading about this topic a lot. Not sure how this exactly works. But based on what I have learned, it seems that investors will not be bothered with NDAs because they have so much going on. Also people from the startup community say that an idea is worth nothing, it’s the execution what matters.

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