Why Most Investors Won’t Sign NDAs

If you aren’t familiar with the term, NDA = Non-Disclosure Agreement, also known as a CDA, or Confidentiality Agreement.  This is a document that protects confidential information from one or both of the parties that sign it.

A lot of times, people are worried about telling others about their ideas for fear that their idea will be stolen. This blog post is a great essay on why this particular investor won’t sign an NDA when talking to a new investment prospect.  Do ideas get stolen on occasion?  Yeah, they do.  But I really like one of the points he makes:  “Ideas are plentiful.  Execution is scarce.” 

Additionally, if you look at the latest in entrepreneurial thinking from Silicon Valley (see www.steveblank.com for a great example), it’s better to engage your potential customers right from the very start so that you don’t spend time and money on developing an idea that won’t have market legs.  The only way you can do that is to get those customers involved with your idea while you’re developing it!

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