Why NDA’s Are Not On the Startup Maturity Checklist

Written by Sean Murphy. Posted in 2 Open for Business Stage, Legal Issues, skmurphy

What follows is an e-mail thread converted into a blog entry. I got a suggestion on our contact form related to the Startup Maturity Checklist:

Some software companies will require you to sign an NDA before giving a presentation or sharing any other details about the company’s product. You may want to add this to the checklist.

My answer was that we don’t advise that approach. We do believe that employees should sign an invention and patent assignment form to protect internally developed IP but if you can’t give a basic demo w/o an NDA you are probably either giving the wrong demo or overly concerned.  I covered this a little bit in “NuSym De-Cloaks Part 2”  about two years ago:

  • Quiet mode (stealth mode): I am normally in favor of this, but if you are advertising jobs for folks and identifying yourself as associated with the startup in public forums it can’t hurt to to at least talk about the problem you plan to solve. Other opinions on “stealth mode startups”

He replied with some clarifications (link added, some identifying info removed at his request).

Thanks for the reply. I’m at a start-up in Santa Clara. I mentioned adding the NDA to your list, because I had talked to a few companies in the past who were selling ERP software, and they wanted me to sign an NDA prior to demonstrations.

These days as a startup you normally have to sign a larger company’s NDA form which tends to slow down the whole process for talking to a prospect to the point that it’s counterproductive.

Normally you only get into an NDA level presentation if you are discussing product roadmaps or other confidential information that would not be available in a standard datasheet or website briefing. What may be going on here is that they want to make the presentation seem special because it’s “under NDA.”
How did you come across our site?”

I came across your website and saw the section on bootstrapping breakfast gatherings. I would like to attend, but I do not have a software start-up company.

We get a number of technical consultants (some of whom are hoping or planning to add a software offering to their mix) as well as engineers who are considering striking out on their own. But we tend to have serious conversations that are most useful to folks already in a startup or close to starting one. You are welcome to attend if you have an entrepreneurial itch. Each meeting is different because we get different people attending with new information and new challenges.

With your permission I would like to convert this e-mail thread into a blog post (I would not name you or identify you by company, but mention that the startups that are calling on you ask for an NDA first). Thanks very much for your question and follow up, I will use it as an excuse to write a short blog entry if you don’t mind.

Please go ahead, but don’t use my name or company name. Thanks for taking the time to answer my question and for the various links in the email. I’ll check them out.

I welcome comments, questions, or suggestions on our Startup Stages Model or on other challenges you face bootstrapping your startup. Please use the contact form or e-mail me directly.

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