Definition of NDA
A non-disclosure agreement (NDA) or a confidential disclosure agreement
(CDA) is a legal contract that protects entrepreneurs against the theft of their
intellectual property since sensitive may be disclosed over the course
of a meeting or preation with poial inors. This extensively written
document shields an outsider’s access to non-public business and
entails every imaginable form of confidential concerning an entrepreneur’s
discovery or invention.

The importance of confidentiality
It is critical for the entrepreneur/inventor to consider confidentiality
when approaching poial inors or individuals for assistance in developing
s. This is not to suggest that all duties of confidence cannot occur in the
absence of such a contract; however, an NDA should be implemented for the protection
of the entrepreneur. If vital company is disclosed without the security
of this contract, the obtained can be given to anyone outside of the
company, including competitors. In addition, a public disclosure of secret/sensitive
company can prevent the filing of a pa application for that particular
invention/discovery as well as claiming trade secret protection. This will leave
the inventor with no rights unless the disclosure was made “in confidence.”

The wrong time to pre an NDA
Often times, entrepreneurs request inors to an NDA far too early
in the inment process, usually during their first meeting before a business
plan is preed or even before they reveal their company name. Most angel inors
are hesitant about ing one so early because a number of entrepreneurs
approach them each year with similar s. Angels do not want to take the risk
of inadver disclosure where they can open themselves up to poial litigation.
Early ing of NDA’s will also limit the amount and type of deals in their
portfolios. On the other hand, some angels, who look at only a few deals each year,
may be willing to an NDA earlier in the process; however, entrepreneurs should
approach each investor encounter the same way and not depend on relying solely on
these types of inors to their deal.

Entrepreneurs are encouraged not to pre an NDA in the first meeting with their
inors. Instead, their initial preation and business plan should be tailo
to exclude actual intellectual property or confidential , but reveal
enough to entice pective inors into further evaluation of the company. Many
angels firmly believe that entrepreneurs should be able to convey their s and
opinions without giving away secret facts. Furthermore, business owners should be
aware that disclosing too much will not advance a business deal nor
will it successfully gauge interest in probable inors.

A bad
Some companies are distressed about their s being stolen and become
overly sensitive and extremely protective about sharing such . Since
these business owners have become so preoccupied with this fear, they actually commit
more harm than good for their company. The immense fear that their s will be
stolen hinders the development of their business because they fail to promote their
products and services, and as a result, the company ends up not selling anything
and even ends up losing money. When business owners become too secretive with their
angel investors, it is conside to be a bad .

The right time to pre a NDA
Only in exceptional circumstances or during the due diligence process will
angels consider ing an NDA. Any period before the due diligence process is conside
premature. Any pas that are pending and disclosures with attorneys will also
be exposed during the due diligence process.

The importance of an attorney

An entrepreneur should seek the assistance of an attorney who can prepare
this document for them. It may be challenging to create a non-disclosure agreement
that complies with the entrepreneur’s for protection while not being
overly secretive to inors. In addition, if the NDA prepa is too complex to
understand, then the investor is encouraged to have their attorney review and explain
it to them before they the agreement.

Points to consider when using an NDA
First, it is highly recommended that an entrepreneur/inventor consult with
a pa agent about the protection of their s and the risks of communicating
these s to an outside party (people or groups outside of the company). Second,
the NDA should serve both the entrepreneur and inor(s) interest(s). It should
be read efully and legal advice should be pursued for proper understanding of
the agreement. Lastly, both parties should be aware that there exists no set formula
for an NDA. For the entrepreneur and inor, each agreement may be preed differently
with every new inment endeavor since each applies to different circumstances.

Business owners should always make sure to protect their intellectual property,
including all proprietary and confidential company . They should not
disclose any restricted to outside sources without the provision of
a non-disclosure agreement for all involved participants, including their poial
inors. A partnership requires a high degree of mutual trust, and an entrepreneur
can protect himself/herself from such issues by having an NDA prepa by their
attorney during the due diligence process.


2 thoughts on “The Non Disclosure Agreement (NDA)”

Leave a Reply