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Insights from a Seasoned Startup Lawyer
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Building a High Profile Web/Software Company

Non-Disclosure Agreements (NDA’s)

It’s a good idea to sign an NDA with any party you are doing business with that might have access to anything proprietary about your company.  All your vendors should sign NDA’s.  You should only give a mutual NDA if requested – why promise not to disclose their secrets unless you are asked to.  You should be careful who you do a mutual NDA with or when you agree not to disclose their confidences.  Consider what they may be telling you and if you are in a similar business and may someday be accused of stealing their ideas.

You should have a standard form of NDA (one-way) and NDA (mutual).  Note that VC’s will not sign NDA’s – don’t even ask.  They stake their reputation on not stealing ideas submitted to them.  That said, you may want to be careful as to what board the partner you are pitching to sits on.  What you tell him may influence his input to any company he/she is building.

When asked to sign another’s NDA, there are a few key points I always look for.  The most important is the definition of “Confidential Information” or whatever the defined term is.  If you’re signing that you will hold confidences, you want to be sure the definition is as limiting as possible, but reasonable.  Marked “Confidential” is the best – very clear and not much falls into this category.  I’ve seen “all our customers, reports, information, ….” – way too broad, doesn’t even indicate that it needs to be non-public, sensitive, and/or private information.  I find a good common ground is “information which is marked confidential or is of a nature which should reasonably be expected to be held confidential.”  This works well for both the giver and receiver.