Forums: Discussions for entrepreneurs and small business.

Yours is a situation faced by many of our clients. While every situation is somewhat different and requires a specific strategy- here are some general thoughts:

While it is true that NDA’s can be expensive and time consuming to enforce and many professional investors won’t sign them, I believe they are a useful tool when applied at the right time in the proper way.

It is also true that ultimately you have to disclose all information pertinent to their investment decision. We advise our clients to make the “full disclosure” only after you have confirmed that they have real interest in the project.

Also, keep in mind that “execution” is the big difference between an idea and a profitable business. If you are in a strong position to execute – you make it “easier” for the other party to invest in you rather than try to do it themselves.

Hope this helps. If you wish to discuss your specific situation, contact me privately.

Robert Johnson

Katt

Your messages says:  What they will do is have the investors sign the plan on the bottom that states it can not be used, as it is the exclusive property of that firm and myself. 

Does that mean that Firm owns the plan along with you? Could present a challenge in the future?

I am not an attorney and I have limited formal training in business law but I agree from experience that NDA`s are very hard to enforce, if not impossible and/or financially prohibiting.  We use them a lot anyway.  If done correctly, they are more of an indication of intent between two or more parties who wish to do business together, hopefully for mutual gain.  If you cannot agree to the terms of an NDA, you have a problem and you should not proceed.  Nothing replaces knowing who you are giving the information or ideas to and what the risks are by doing so.  The NDA’s makes you think about the entire process if they are done correctly.  Since it is a legal document, it should be reviewed by an attorney before signing.  “Standard” forms for NDA’s are generally worth less as they skip the real value in NDA’s, the process.

The best advice here is to read the book that Steve mentioned.  It is worth purchasing...