That Non Disclosure Agreement (NDA) Is Your Problem!

That Non Disclosure Agreement (NDA) Is Your Problem!

Think about it – it does not make sense. You approach someone to help take a look in your business model. The person agrees to help you as part of supporting the community. Then, you send a Non Disclosure Agreement (NDA) for that person to sign. Honestly, I cannot imagine anything more stupidly insensitive than that move: you want freebies, and you still want the person to sign NDA!

non-disclosure agreement (NDA), also known as a confidentiality agreement (CA), confidential disclosure agreement(CDA), proprietary information agreement (PIA) or secrecy agreement (SA), is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to or by third parties. The most common forms of these are in doctor–patient confidentiality (physician–patient privilege), attorney–client privilegepriest–penitent privilege, and bank–client confidentiality agreements.

The problem is not the signatures you are asking for, the issue is the thinking that any professional will do it. Personally, when I get that, I will simply reply “We will review” and that is it. Why would I risk my businesses to help you, free? Of course, if you want NDA, we would have an engagement contract which will naturally have NDA, and enforcing it is part of my bill since my colleagues must be part of the compliance. There is no decent professional that would take over liability of agreement compliance when working for you free.

Yes, if you cannot trust the decency in humans, you should not expect to get help out of this world free. I know you read it from a lawyer (we like lawyers) but I can assure you that no credible person will help you with that mindset. The NDA you are parading is part of the reason you have no traction in that venture! If you check carefully, people are not helping you.

Sample of NDA (source: gratulfata)

NDA for Business Plans

Then the craziest of all: asking an investor to sign NDA before you would share your business plan. I am not aware of any credible investor that would sign, and you asking for one demonstrate severe lack of awareness of the ecosystem. While lawyers will tell you to do that (yes, to protect your idea!), you need to be informed that the market belongs to the person that writes the cheque. Possibly, unless you are Elon Musk who can come up with something extra-super-awesome, no investor would sign to read that business plan. In other words, for real investors to sign, you must have elevated your level with unbounded history of success; that does not typically happen.

Get me right – you can continue to parade NDAs looking for people to help you even when signing to absorb all risks before they could do that! Yes, you could continue to look for investors that would expose their assets to risks just to read one document they are not sure of the value therein. You can do whatever you want; it is a free world. But let me make it clear: you would not make progress with that attitude in this world where people post their business plans online to raise capital.

Business plan is largely free; execution is the key. If you check business plans on providing adequate electricity in Nigeria, there may be more than 20,000 of them in Nigeria as I write. The challenge remains that we do not have more than 5 executors at scale in that sector.

I am not saying your business plan has no value. It does have but you need to be real. If in the path of raising $100k you expect a person managing a fund with assets of $500 million to sign NDAs, you have not started. Yes, lawyers told you to do that: of course the lawyers can fund your firm. No serious investor will bother to engage you when you parade that NDA.

There are many emerging business models. Yet, do not think they would make you special to get NDAs from investors

 

The Way Things Work

This is what happens in this world: if you are going to meet the top 5% in the world in any private business advisory or fundraising, they would send you a document ahead. In that document, they would ask you to sign that YOU WOULD NOT DISCLOSE ANY PROPRIETARY INFORMATION during the meeting. They flip it because they “own” the world and if you do not like it, you are free to remain in your village.

If you do not sign-off that document, you would not be processed to participate in the event. In short, they hire specialized companies to process you before you can meet these super-rich people for business level discussions. All entrepreneurs looking for capital sign-off making it clear that there is nothing proprietary they would disclose.

Now, for you to think the other way round is pure stupidity [you are the one that needs help]. You do not expect a billionaire to risk his assets to listen to you asking for $500k when they do not even know the value of what you have to offer. Taking it home in Nigeria, I do hope people become real and stop this NDA thing. There are moments for NDAs but we are abusing them in the fledgling Nigerian startup scene. If you have a business plan that contains proprietary things, there are ways you can still share the business plan while managing the IPs. You cannot expect people to overexpose themselves to risks just to help you.


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2 thoughts on “That Non Disclosure Agreement (NDA) Is Your Problem!

  1. Sir, could you link these articles to your posts on LinkedIn so readers here could proceed to engaging with other LinkedIn readers in the comments section there. I prefer to come to Tekedia directly to find your posts and there’s not usually much activity here in the way of comments.

    Thanks.

    Reply
    1. Yes, indeed. Actually, it is linked to LinkedIn as most of my articles. But people read and revert to LinkedIn to comment. I think LinkedIn has a feature which we have been unable to replicate here. We do prefer comments here so that others can read them. But we have not succeeded. That is why we try to respond to any comment here.

      Reply

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