Note on NDAs

Deal flow is the life blood of the venture capital business. Without the steady stream of new business plans and new opportunities, our ability to make strong investments with substantial growth potential for our investors would be greatly diminished. If we were to "steal" a business idea from a potential investment, our strong reputation with entrepreneurs would be irrevocably tarnished, and we would be out of business almost immediately. As such, it is in our best interests to protect the secrecy and security of your plan, and we do this vigorously. However signing non-disclosure agreements (or NDAs) presents problems for us on two levels. First, with the vast volume of deals  that we see, such NDAs would quickly limit our ability to look at new plans and thereby limit our ability to invest in promising new ventures. The problem is particularly acute when you consider that most of our businesses are in a fairly narrow range of opportunities, so the likelihood of some overlap in business ideas increases greatly. The second issue relates to time. We as a firm pride ourselves on providing a quick response to entrepreneurs about their business plans, and the added legal steps of ensuring that we could sign a specific NDA would lengthen that process significantly.

So how can you protect yourself without an NDA? First, remove the detailed technical specifications for your product or service from your plan. We, like most investment groups, are going to be more interested in the backgrounds of the individuals, the size and scope of the market opportunity, and the general problem that the company's product or service addresses. These are all areas that you should be able to address without harming your company's proprietary position. If you cannot, you need to think hard about the real strength of your competitive position.