The Cult of the Non-Disclosure Agreement

The anonymous entrepreneur blogger at Frozen North says that we have created a cult of the non-disclosure agreement in our culture. Entrepreneurs are concerned about protecting their innovative ideas and don't understand when venture capitalists and other potential investors or financers don't want to sign a non-disclosure agreement (I went through this recently with one of the startups I'm advising).

He says that the entrepreneurs' logic is wrong in most cases, and that the only information which is appropriately confidential is:

* Trade secrets, unique methods and algorithms, and processes.
* Customer lists and prospect lists.
* Data generated on behalf of a client.
* Information which a third party has asked be kept confidential.

I think he makes some excellent points here, but I also think it's important to note the key words "in most cases". Sometimes there are legitimate competitive concerns. If your competitors are nimble and agile, they can respond almost immediately to a major announcement from you, and if they get even a hint of it in advance, they may wipe out your window of advantage.

So I can see both sides to this, but as an entrepreneur, be prepared that you probably won't get prospective investors to sign NDAs. In fact, you'll look amateurish to them for even asking, so don't.

Via Anthony Cerminaro